What You Need to Know Before

Document Sample
What You Need to Know Before Powered By Docstoc
					Getting money may not be difficult but getting money at the right time and on the right terms is what
matters. This is what capital raising is all about. Firstly, you need to determine how much money you
need. You should always ask for more than what you actually need. Remember that getting cash is
cheap but selling equity is not. It gets really difficult to retain your stake in your company once after you
have sold it. Therefore, it will be good if you borrow money in smaller rounds especially in the start-up
phase when the value of your company is low. Figure out how much money you need to reach your
goals. Here you should ensure that you need to raise sufficient capital which helps you to run the
company as well as achieve the milestones. This is because you will have to bear the operational costs of
a particular project.

Now, the question is that when do you need to go for capital raising. Always start the process of capital
raising before the actual need arises. This is because you always need the money sooner than you think
you need it. It's no use trying to douse the fire after the whole house has crumbled down to debris. You
should be always proactive. If you are planning to take a bank loan, start planning 3-4 months in
advance. For angel investment or venture capital, at least expect 3-12 months. You must always be
prepared for a long haul. Also ensure that you have a strong banking relationship so that, just in case
there is a gap between the capital you expected to raise and the capital you actually raised, you can
bridge the gap with the help of a bank loan.

It's important from who you raise your capital. If you plan to go for capital raising, look for people who
you like and respect. It should be noted that you and your investor will be together for quite some time.
You will go through the ups and downs together. Therefore, you should choose someone who is quite
aware of this fact, has knowledge about what business you are doing, etc. Capital raising is not a very
easy task. You will need to make a few compromises after you borrow money from someone else. You
will be accountable to the investor; the investor might interfere in your policy decisions. You will lose
equity and control. Keeping these things in mind, take your decisions carefully and go for capital raising.

The people go with investment banking services while business set up which helps him for capital

Shared By: