Raising Capital For Your Company? Follow These Guidelines

Raising Capital For Your Company? Follow These Guidelines

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If you want to find cash for your company here are a few things to consider.

Then when they are not successful at learning how to raise capital they shake their head and wonder why. Here is a list of the most common tips I recommend if you want to know how to raise capital from institutional investors.

1.Do it the investors? way- He is the one with the money right? I always remember what my friend professional investor Kerry Packer used to say was the golden rule, "the one with the gold makes the rules". If you want his gold, you follow his rules, not yours.

Institutional investment committees have established procedures they have to follow. They cannot make any exceptions no matter how much they like the deal and the management. it is their money not yours.

If they send you the forms and procedures they need to have in order to evaluate your deal, send them what THEY want, when THEY want it and how THEY want it. If you tell them, "It's all in the IM", or if you want to talk with them before completing the forms or if you do not want to complete the forms, they hit the delete button. It means you really do not need the money and are going to be way too difficult down the track.

Some institutional investors like me look at over 50 deals per day and need to see the stuff on their forms to evaluate your deal. Also give them all the stuff in one email, even if you have given it to them before. They sometimes have over 500 unopened emails in their inbox and do not have the time, inclination or patience to go searching for all your stuff.

2. Do NOT be difficult it is a sign of an idiot. One of the things they evaluate is how easy the management are to deal with.

Here is why: if something goes right with their investment into your company that is what is expected of the institutional investor. If something goes wrong with his investment into your company then it is his neck that gets chopped off and he get subjected to a lot of screaming, abuse and liability.

Therefore- if you are in the slightest bit difficult at all to deal with in the beginning he will run for cover and completely reject the deal. He cannot take the risk.

If you are difficult in the beginning it means you will way too difficult down the line when he has money with you.

3. Be on time for meetings- If they have a conference call scheduled for 5PM, be there on time. If you are late it shows you are not organised and not a good manager. Also when you book a call, let him know what time it is HIS time zone, not yours. Better yet, use outlook meeting request.

4. Give him your stuff on time. One thing that really irritates him is people who send him their stuff late and then expect me to hurry up. Like my colleague Inspector (rtd) Bill Majcher who used to be the head of the criminal enforcement division of the Canadian Stock Exchange always says "a lack of preparation or planning on your part does not a constitute an emergency on mine"!

When they send you a term sheet, do not sit on it. Call them with any queries you have immediately. If you are going to sign it, then sign it. If you are not going to sign it let them know. If you want to give a counter, send it back with a redlined version. Every change you make needs to be tracked! Better yet, do not make any changes at all.

5. Don't try to fit a square peg in a round hole- if your deal does not fit their criteria don?t try to BS them that it does. They can only do the deals they can do.

6. My mother always told me- tell the truth no matter what. In this case it is imperative because you could end up in BIG trouble my friend. If you lie then someone like my friend Inspector (rtd) Bill Majcher will put you in jail. It is that simple.

7. If you are not alreayd listed, you should have to plant to be listed soon or have a good working relationship with a company which is already listed. You will complete your capital raise faster. Investing into a listed company is much easier. They can go online and check all your public filings and due diligence goes much faster. If your company is not public yet fidn one that is.

8. Hire a good pr firm and market maker- The more liquid your stock is the easier it is for them to invest in your company.

9. Do not waste their time- if your company does not have a real capital funding requirement now, do not waste their time. Do not "test the waters" with them. Wait until you do need the money.

10. Do not "shop" your deal. Some people like me have over 500 people in their deal flow network who send them deals. I have seen some cases where they have issued a term sheet to a company only to have the deal presented to them by someone else afterwards. This gets them really angry and makes you look bad too.

About the Author:
Private equity expert. Knowledgeable invesmtment expert.
http://www.thefmsgroup.com



Article Originally Published On: http://www.articlesnatch.com


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