Raising business capital is no small task. It is a process that requires thoughtful preparation, especially on the part of the chief executive officer.
Regardless of whether the fundraising is being done for the first time or it has been done several times before, the proper preparation remains vital to the success of the process. Here is a look at four essential steps that will come in handy when preparing for raising venture capital.
Clearly Define The Purpose/Objective Of The Fundraising Event
One of the first things that a chief executive should do is to clearly identify or define the purpose of the fundraising event. In a large number of cases, fundraising events are not designed for the sole purpose of pulling in venture capitalists and other potential investors. These events often double up as platforms for reaching out to new business networks and even gaining publicity.
A clear definition of the purpose of the fundraising event is essential to boosting the confidence of potential investors. It is advisable to avoid having multiple objectives for the fundraising event so as to increase your chances of success.
Make Appropriate Budget Listings And Establish A Fundraising Goal
Ensuring the success of a fundraising event also requires appropriate budgetary preparations. You need to think of all expenses that are vital to the success of the event. These include the cost of invitations, catering, rental space and entertainment among several others.
Budgetary listings for the fundraising event should be made with the fundraising goal in mind. Remember that you’re the amount you wish to raise (the fundraising goal) should be the net amount after deduction of all expenses. Having a fundraising goal will help you to gear all event activities towards reaching this goal.
Prepare And Review Financial Data Beforehand
Data collection is known to be among the most time-consuming activities involved in preparing for the fundraising process. It is important to review your financial data before initiating funding conversations with new potential investors. This is an important preparation step because your business is bound to have changed since the last time you were involved in fundraising talks.
The new investors need to be aware of these changes, and venture capitalists will want current data such as the monthly revenue for each customer dating back several months or years in some cases. Having accurate and up-to-date data will definitely increase your chances of reaching your fundraising goal.
Keep Communication Lines Open
Last but not least, you need to ensure that you establish effective two-way communication with potential investors right from the start. This is more so important for chief executives looking for long-term venture capitalists who will help their business grow.
Initial conversations with venture capitalists can be made highly productive by seeking the opinion of fellow entrepreneurs who have successfully raised venture capital in the past.
It is also important to ensure that no contentious issue is ignored when interacting with venture capitalists. This includes issues that your business may not be able to deliver. Always remember that transparency in communication is the best way to win the confidence of a venture capitalist and by extension his or her money.
Next time you’re preparing for a fundraising event, remember the four steps discussed above.