Bernard Dale, partner at Connection Capital, advises how to raise capital from professional investors
1. Investors need a business plan. This will get your message across and it speeds up their process of understanding the business. It also helps them articulate it more clearly to their colleagues or investment committee.
2. The plan should explain where you are in your market, what its dynamics are, where you will sit in the future and why this will make you a valuable business.
3. Most plans forecast an increase in sales. In my experience this is the area where company’s most often fail to deliver, so you must have a very clear plan for how this will work in ‘real life’.
4. Management is key: individuals might come up with business ideas, but teams delivery it. Your investor will only move forward if they are convinced by your management team.
5. Remember, the process is a meeting of equals. Be self-assured and confident.
6. Investors will want to look at the potential returns things do not go to plan. I often ask for two forecasts: the one a team hopes to achieve and the one they really believe will be delivered. I will then form a view with these clear parameters.
7. It is likely that the investor will regard the proposal is more risky than you do. It’s not their fault, life has taught them that forecasts are rarely achieved.
8. Once an investor has committed to the deal they will want it to complete (it’s what gets them paid), so if a problem emerges in the deal let them know. They will want to find a solution.
9. Do not fear independent non-executives, they can really help. It’s worth investing time getting this right.
10. Always ask for feedback in meetings, during the process and after investment. This is a good way of sizing up your potential partner and understanding what they really think.