Raising capital is one of many topics that are being discussed in Foresight’s Investment Readiness Workshop. Other topics include types of investors, financing fundamentals, deal structures, fundraising tools, business plans, financial projections, valuations, negotiations, governance and advisory boards, liquidity for investors, share cap tables, and option tables.
The first session for the Investment Readiness Workshop begins Sept. 16 at 9 a.m. If you’re ready to explore investment issues and opportunities for your cleantech venture, register here.
Each of fundraising’s Five Deadly Sins can spell trouble for your business. Reflect with your team and advisors to ensure you haven’t fallen into one of these five traps.
Number one for the five fundraising deadly sins is sloth. This is launching a raise before being prepared. Do the work so you understand your audience of investors and the process. If you don’t, it will show, and you may miss out on significant opportunities.
Make sure you can these key questions:
- Can you achieve what you are pitching?
- Do you understand the effort that goes into investing in a company?
- Are you investable?
- Can your organization tell investors a compelling story?
Fundraising’s second deadly sin is lust. This is when your company seeks too high of a valuation, or you are worried about dilution. There is only one thing worse than being under-valued, and that is being overvalued. Being overvalued creates a risk of a future down round that is never fun to explain or go through. The objective of raising capital is to fund a growth plan which increases the “size of the pie” greater than the “size of the pieces.” Dilution needs to be recognized as a tool to accelerate the growth plan.
The third deadly fundraising sin is greed. Make sure you are prepared to walk away from a bad deal. Recognizing when a deal is not right is hard to do. But sometimes no deal is better than the one that is on the table. Know when to trade valuation for better terms.
The fourth deadly fundraising sin is pride. This can occur when you keep moving forward even when you don’t understand something. When in doubt - ask. If there is some element of your business that you don’t understand and you are rushing through that section, that is a big red flag. Your goal is to make it as easy as possible for investors to understand.
Finally, fundraising’s fifth deadly sin is gluttony. This happens when your company takes on too much capital. If you put too much money into the company, you may be setting yourself up for a problem down the road. Taking on too much capital that cannot be put to work risks the value of the company at the next round. The objective is to execute your plan, grow and generate a return on the capital that investors have provided you with.
Register for Foresight’s Investment Readiness Workshop today and learn more about how to set yourself up for success when meeting with investors.
