The Art of Getting Funded

They say you need money to make money. Well those are the people who makes lemonade when they are given lemons.  But Smart Entrepreneurs makes a helicopter when life give them lemons, so to speak.

While you Smart Entrepreneurs out there are resourceful, you would undoubtedly need resources to propel your business forward. And more often than not, you need cash. you need cash to hire that smart and hardworking employees to do your marketing for you, you need money to purchase more stock so that you can sell more, you need that extra sewing machine, you need money to grow your business and make more money, hopefully.

I am a clear advocate of cash-last method of doing business, where creativity and resourcefulness are more important than the resources itself (money, time, energy etc). With creativity and resourcefulness, you can find that extra time, that extra energy, that extra money.  But when it comes with money, you cannot run away from its culture and structure.

Getting funded has its culture and structure, especially with investors and banks - it is an art. Funders are everywhere, from family and friends to financial institutions and private investors. The key is knowing what they want and how they want it so that they will give their money to you.

Different investors behave differently. Angle Investors looks for passion and works on empathy and gut feeling. They need simple and clear business model as well as their exit strategy and upside. Done right, they would not be as hard when the business fails to deliver. If you do deliver, Angle Investor will own a large chunk of your company though.

Financial Institutions and such wants form and structure. Since the decision makers are committees and people, they need to be certain of key areas - mostly to cover their ass and job. Your multi-million dollar ideas are worth much less to them compared to secured contracts, unlike the angle investors. They want business plans and the works. But they are less heavy on the equity side, preferring solid repayment instead. Here you can make more return as you get to keep more of your business.

Initial Public Offerings are huge and you can get millions based on ideas and compliance. It is not rocket science but you still need a professional investment banker to advise you.

Different businesses requires different type of investors at different stage in their life, getting the wrong investors at the wrong time could prove to be distressing and at times fatal (for the business). Choose your funder carefully.

Work Smart People

The Author is the principal of ElixirEducate- a Smart Entrepreneur training house. He was an international investment banker, corporate financier and was involved in raising a total of over RM1 billion during his tenure. You can find more information on ElixirEducate at their facebook page, here.


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