Three Considerations in Capital Raising for Your Startup

 

Capital RaisingIn Australia, a lot of young entrepreneurs enter the business industry with high hopes. However, without the right amount of capital, their ideas of products and services would not be fleshed out. Capital raising is one of the beginning stages of setting up a company, and it is indeed a roller coaster ride of approvals and rejection. Raising funds for the business can be done in two ways: getting help from investors and investing your own money. As the saying goes ‘Never invest your own money’, which is why the first idea is mostly preferred.

Before meeting with potential investors, there are questions that you need to answer with regards to the total amount of money you should get to cover your startup expenses. Although most partners say that it is ideal to get as much as you can, you should never bring in more money than what you can handle. Remember that the investor would have more control depending on how much funds he gives. Search for a middle ground where you can have enough amount to get your company going without sacrificing the whole control of the company. Factors, such as budgets and timeframes, should also be considered.

The value of the company should also justify the funds that you demands from investors. If it has high valuation, it should already be showing positive progress at an early stage. Bear in mind that there are more problems related with high valuation, but the chances of success is proportionately higher. There are also times when your company would have to be supported by an artificially inflated valuation, which could be straining to your startup. It is best to compare your company to others in the industry and consider that not all startups are deemed to succeed.

The last thing that you should ask yourself about with regards to capital raising is your expenditure plan. It should be looked over with precision, which is why going over details is necessary. Knowing the big picture should not be enough to review the company progress. It is recommended to expect unforeseen expenses and understand its effects on your startup’s progress. As founder, you should consider expenses on development, marketing, sales and customer support. Your aim should be to increase the productivity on your company, as well as keep customers happy. Easy money could also be misused so be careful in overspending and lack of focus which may lead to financial laxity.

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