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The Basic Elements of Raising Capital For SMEs

As a small business, raising enough capital for your organisation remains to be a major issue. Due to lack of experience, many businesses have limited knowledge of the array of options available to raise funds.

In today’s article, we discuss the basic elements of raising capital for your business so that you too are able to find sufficient capital to pursue your goals. 

1. Prepare Yourself For the Future

It is crucial to prepare for sourcing for the funding you need. Although this step is frequently overlooked, you have to ensure that you examine and address multiple dimensions of your business in order to ensure that it is ready overall. Failure to do so will result in the constant transfer of sufficient resources to run your business. You will have to assess your team’s overall health, conduct research on your industry, competitors and the market, define your products, prepare financial projections, and find out the amount if capital to raise, as well as decide if you want to rely on debt or equity.

Although the preparation step is rather time consuming, it will be much easier to figure out whom to target if you are sure of what you want and outline the rationale behind your options.

 

2. Conduct Research on the Different Types of Investors

You may have decided whom you are going to target and the amount of capital you are aiming for. Yet, that does not guarantee that you will receive what you have requested for. A greater number of options is always better when it comes to matters relating to finance. This will allow you to have a backup plan in case of any contingencies that may occur. As such, the different types of investors you can consider are: family, close friends, founders, angel investors, venture capitalists, investment groups, crowdfunding platforms, business incubators, and single family offices. 
 

3. Network and Source for Potential Investors

The key for finding suitable investors is networking. The more people you get to know, the better. You don’t have to constantly promote your business as you network but you do need to ensure that are helping others. This will allow you to gain a positive reputation. Besides, helping others to achieve their goals will only persuade them to help you out as well. 
However, you have to be aware of the fact that it is normal to encounter rejections while discussing your business and ideas with others – some investors may not be actively looking for an opportunity, while others may feel that your ideas are not the right fit. 
Researching on various investment groups and online resources is worth the effort. To remain proactive, you can try to make phone calls and send emails. 
 

4. Look For Companies That Offer Funding in Your Niche

Whether you have a niche business model that aligned with e-commerce or you produce technological devices for the healthcare industry, you can source for investors who offer funding to such types of businesses.
This does not mean that you need not source for additional sources of funding, but, if looking for tailored solutions streamlines your process of finding capital, it will be worthwhile.
 
 

 

If you would like to learn more about how to maximize one’s opportunities to raise capital and source for the right venture capitalist, do join us in our next LearnXNetwork event happening tomorrow, on 29th August 2019.

For more information, do visit our event page: https://hercapital.peatix.com/

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