Most new ventures and companies need capital until the operations are self-sustaining. But how much capital and what type of capital is most appropriate at different times?

 

Raising capital can be challenging, and success is enhanced with a thorough understanding of current and future funding requirements. In-depth forecasting that is scrutinized from several perspectives is the best manner to accurately assess capital needs. What-if analysis on different funding vehicles, (debt, equity, hybrid, convertible) helps to assess what works best and understand what investors may prefer.

 

Then the important step of communicating your needs to funding sources comes next. This is where a well prepared Business Plan along with associated documents is so critical. Use of Funds statements are summaries of spending plans. The thought process that backs up the capital requirements needs to be clearly conveyed with a well prepared forecast that can bear the scrutiny of investor mindsets.

 

In an ideal world, just the right amount of capital would be pulled into the organization only as needed and at the most favorable rate. The reality is that raising capital for new ventures typically has different windows of opportunities. At times it may not be wise to accept all the funding offered. In other situations it may be best to take in all the funding needed for several years, or to receive capital commitments from funding sources.

 

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