This blog on how to obtain private sector financing for your growing business is the latest in a series of three to be published this week.
Once you have developed the investment project that best meets your needs in your quest for funding for your growing business, you are ready to woo potential investors. You can get venture financing from friends and family, angel investors, corporate venture capital, financial institutions and government or large corporations. You must therefore take time to reflect on what is best for you.
As the stakes are high for both parties, each should obtain the relevant information. Among the points it would be good to discuss include:
• investment of your personal capital in the business, reflecting your level of commitment;
• position your company in the market and its competitors;
• Your advantage in terms of competition and your strategies;
• that the investor withdraws its investment: risk, gains, the exit strategy.
Ideally, if you exchange some control of your business against a contribution of funds, you should have access to more than simple fund investor. You must mention your needs during the negotiations. Why hesitate to ask the right questions to interested investors, while you know very well that they will lead, in turn, a full investigation into your business?
You could ask them the following questions:
• What the experience of the investor in the industry could help me?
• What other benefits and resources the investor can offer your business?
• The investor will offer he’s coaching and mentoring?
• The investor is he able to provide lists of potential customers and enable you to build successful relationships?
Leverage the strengths of the investor. Evaluate the case from different angles, after all, cultivate a lasting relationship with your investor is advantageous for both parties. Always have for the future of your business it would be wise to leave the door open for future funding options.
While your investor completes the due diligence, lean on the legal implications of the agreement, as well as government regulations or existing markets that could also affect the agreement. It is important to finalize details before the deal.
The Canadian Innovation Centre offers practical guides to help you look good to investors. To learn more about investors, negotiations and conclusion of an agreement, see our Steps to Growth Capital .