Five signs that you’re ready to raise funds for your business
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Before starting to raise funds for your business via crowdfunding, how can you be sure you’re totally prepared?
Crowdfunding, p2p lending and alternative finance can all be a fantastic means of raising funds for your business. But before you embark on the fundraising wagon it’s worth doing a few checks to ensure your business is fully prepared.
A successful raise requires committing a large amount of time and effort, so much so that it can be a full-time job.
Below are our top five checks that you’re ready to raise:
- Do you need a large investment to grow?
Your company is already profiting and growing slowly, but sometimes it takes a big capital injection to scale up. You may need a large investment to expand your market reach overseas, or to purchase a new factory like our past clients Innis & Gunn.
Of course, investor money can help you to grow bigger faster, but if you don’t have everything else in place beforehand it could end up damaging your business dreams. Be wary of seeking that investment before it’s really needed – think of the Zano mini-drone last year.
There are a lot of positives to raising capital via alternative finance. But before you start the fundraising process, make sure that it really is the best path for you to help your business grow.
- Do you have a solid business model?
Before parting with any cash, investors will want to know their potential ROI. You need to have a clear understanding of your business and your value proposition before you can communicate it.
If you know your market, your competition, and what makes your product different from everyone else’s inside out, you’ll have a much easier job conveying that to investors and winning them over.
- Do you have a financial plan?
How are your finances? Have you thought through your financial forecast and planned your budget out?
Before you even think of approaching investors, you’ll need to have all your financials in order.
They will want to know how much you’re asking for and what you plan to do with any funds you successfully raise. They’ll also want to know how you intend to get to any significant financial milestones and that any costs to get there are all mapped out and budgeted for.
These are all details that any reputable funding platform with scrutinise very closely before allowing you to raise funds with them, so make sure you’re fully prepared ahead of approaching them.
- Are your pitch materials ready?
Before launching your capital raise, make sure all your fundraising materials are at the ready. Are they all planned-out, tested, polished and fully developed?
If not, they need to be before you can start using them on investors who may know nothing about your product yet.
- Do you have strong investor connections?
If you don’t already have key investors lined up, then you’re not ready to start raising funds.
Reach out to your existing business ecosystem (trusted business partners) for introductions. Focus on making the kinds of connections you need with the right type of investors who can afford to help with that initial big push that will drive others to invest too.
Momentum is essential to any successful fund raise so ensure that you’ve got your key investors ready to kick off your raise as soon as it goes live.
Tip – Build your crowd
If you’re planning to raise alternative finance for your business through crowdfunding, make sure you take the time to build up a following. Your crowd needs to be larger than your friends, family and a couple of hundred twitter followers if you want to give yourself the best chance of success.
You will need to build up a strong core of brand advocates, people who love and use your services or product and who can help extend your brand reach.
In addition to your key investors, these people should provide the next large tranche of your fund raise. It’s important that you invest time and money into growing and marketing to your crowd, making sure that they’re behind your fund raise before it starts
Any type of raise, whether it’s debt, equity or rewards based is going to require a lot of hard work. So make sure you allocate the budget and the resources to give yourself the best chance of success.
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A growing number of institutional lender are redirecting their funds, to provide finance to UK SMEs.
CODE Investing has entered into a strategic collaboration with City of London Group to originate SME loans
CODE Investing has entered into a strategic partnership with BNP Paribas Asset Management to originate SME loans.