Picture this: You've launched your capital raise, and investment interest is pouring in. It's looking like you'll reach your capital raise goal in record time, and your business will be able to push ahead with those exciting growth plans.
But before you get too far ahead of yourself, you need to convince potential investors that your company is worth investing in.
Below are five common questions that we often see investors ask when they're assessing whether to make an investment, which we recommend companies prepare for.
Q: Who are your competitors, and what's your point of difference?
There are very few companies out there that are truly one-of-a-kind. However, being able to hone in on the key things that make your business unique from your competitors will go a long way in convincing potential investors.
Is it your approach to packaging, your use of solely New Zealand-grown ingredients or your cutting-edge technology? Put yourself in an investor's shoes and identify the key things that would convince you to financially back a business.
Q: What are the risks of investing in the business?
Private equity investing always comes with an element of risk, mainly when investing in early-stage companies. It's your responsibility to help ease investors' fears by having a clear understanding of your financials and a robust business growth plan that you can take them through. Highlighting known challenges and approaches to minimise or mitigate these challenges can also show you are actively monitoring your industry and competitors.
Q: Is the company on track to reach your milestones?
It's essential to have a clear business roadmap of milestones for the next 12 months to 5 years that you can share with investors. Whether it's bringing on a larger team to help boost production and dispatch or financial goals around revenue, have a plan and set projected dates for when your business will reach these. Sharing a roadmap with potential investors will help instil confidence that your business is on a growth trajectory, with a clear plan to effectively deploy raised funds with a strategic purpose.
Q: What will the money raised be used for?
While this might seem like an obvious question to ask, you'll be surprised how often you will be asked it during your capital-raising journey. Having a brief and concise answer ready to go will go a long way to help you and the team. Focus on the big picture and highlight things like growth opportunities, overseas and team expansion and product development. Investors want confidence that funds can be attributed to activities that will grow their shareholding value.
Q: Who is your leadership team, and what's their experience?
Having a robust leadership team in place can go a long way in helping potential investors to take that final step. Before your capital raise launches, work with your leadership team on a plan for who will front the raise and ensure they are prepped for the investor questions and potential media interest in your company's raise and their industry experience.
Raising capital is an exciting time for a company. However, to ensure the funding round's success, it's important to prepare for potential questions that investors may have about the business, investment risks and the company's future.
Are you interested in learning more about raising capital for your business? Our team are happy to answer any questions and can be contacted at [email protected] or by calling 0800 SNOWBALL.