SOURCING funding to progress to the next level can be one of the toughest jobs facing a small business.
Often, raising the funds from traditional institutions such as banks is not possible.
Venture capitalists are steadily emerging as an alternative source of funds for businesses to gain extra capital.
According to the Corporation Builders website, there are several steps that need to be completed to successfully access venture capital.
Most importantly, the company says that the business must be investment ready.
To achieve this a business must have:
l Market acceptance for the product or service
l A declaration of accounting profits
l Regular financial statements
l Audited accounts at year end
l A spread of shareholders
l A depth of management at both board and executive level
l Engaged recognisable company advisors
l A separation of personal and business affairs
l Clear industry and market strategies and
l Exit and entry plans for investors and founders.
Venture capital investors typically seek companies with a substantial market opportunity that simply requires resources to capitalise on it.
They also favour companies with high cash needs in early stages of growth, those with strong management teams and companies with a low entry price and potentially high exit price, particularly where the investor can exit through listing on a recognised public exchange.
