Category: Finance & Capital

Article Contributed by Ronny Cheng

Fundraising for your startup can be one of the most important and stressful times. When done right, it can lead to partnerships with angel investors and venture capitalists  that lead to millions of dollars to grow your business. If done wrong, it can lead you down a long road where you begin to second-guess your business and model.

Raising funds for your business takes a lot of planning, a lot of patience, and a significant amount of time preparing pitch decks and financial models.

So how exactly do you start to fundraise for your startup?

The Pitch

Well, regardless of whether you’re getting seed funding or going for series A, you always need to have the perfect pitch. The trick to having the right pitch is to keep it short and sweet, and most of all, be passionate. Don’t worry about providing too many statistics, just remember to tell your story and include the details listed below:

• What your company does
• What problems or pain points your product solves
• Have you created technology for this?
• What’s the size and level of competition in the market?
• And most importantly, why will people love your product?

Mastering your pitch is the first step to raising capital for your startup. Funny story, I once spoke to a CEO who said that vacations were his best testing grounds for his pitch. He would sit at the hotel bar and just pitch to random strangers. By gauging the interest and excitement he got from these strangers, he would know that his pitch was heading in the right direction.

The Pitch Deck

Did you think all you would need to get together is your pitch and you’d get thousands or millions of dollars thrown your way? Wrong. After you get your pitch together, you need to carefully assemble your pitch deck. A Pitch deck is a very important fundraising tool. Examples of a good format for a pitch deck can be found all over the web. However, Forbes has a great breakdown here. They break it down into 11 basic slides for your pitch deck.

1. Vision/ Elevator Pitch
2. Traction / Validation
3. Market Opportunity
4. The Problem
5. Product / Service
6. Revenue Model
7. Marketing and Growth Strategy
8. Team
9. Financials
10. Competition
11. Investment ‘Ask’

Pitch decks are great tools for raising capital for your startup, and are a great way to segue to and from introductions.  You’ll need to leverage your connections and have them provide brief information about your company, as well as your pitch deck. This allows investors to quickly scan what it is you do, and decide whether it’s worth actually meeting you.

As you present to more and more investors, your pitch deck will become your best friend. You’ll carry your pitch deck with you wherever you go, and constantly nitpick at little details.

Article Contributed by Ronny Cheng, Carkibo, http://www.carkibo.com. The Best and Easiest Way to Sell Your Car.

Article Contributed by Paul Jackson, CEO, Worthworm

As someone who spent many years as an investor, I can tell you it’s actually a great time to think about turning your innovative idea into a reality. There have never been so many methods of raising the capital needed to be successful be it an accelerator program, crowd sourcing, boot strapping, or something else. However, many of you will at some point need to seek funding from an angel investor or group of investors which can be extremely tricky to navigate. The truth is, the funding process can be one of the most complex challenges small business owners and startup founders face when growing their company. Consider the three lessons I’ve learned from my time one the investor side of the table as you meet with investors and build a successful and thriving company.

1. Make accurate and honest financial predictions
   Honestly, ongoing financial success doesn’t typically come easy to most companies. If you don’t have a background in finance, its easy to get swept up by the promise million dollar headlines tend to make. My advice is to stay as accurate and honest as possible about the worth of your company when meeting with investors. Remember, this is what they do for a living and they’re going to be incredibly sensitive to anything that feels overblown. It’s much more important to present accurate financial predictions and then be able to demonstrate how you plan to grow and scale in the marketplace gradually. After all, the investors’ ultimate goal is to have a return on their investment and they understand that might not come for some time. Your goal should be to show them how you will achieve that with the money you’re asking for.
2. Don’t get greedy, seek what you need
   In addition, to being honest and accurate we might as well talk about not getting greedy. It might seem tempting to ask for more than you actually need during an investor meeting, after all the startup game is volatile and more money might mean more stability. If a smart cooler can raise $10.5 million on Kickstarter, why can’t you ask for a cool million from an investor? However, in my experience securing more money than you need often causes more trouble down the line. This means things like money that gets misused and resourced in the wrong places, you acquire incompatible investors who want a controlling stake in the direction of the company or even pricing your business out of future funding rounds.
3. Prep the management team
   Financial savvy is something that should resonate throughout your entire management team. Competition for funding dollars is fierce and bringing an empowered team will set you apart from the numerous other pitches the investors have heard that day. Let your team in on your financial plans for the future, discuss previous successes and failures, and understand how your collective financial knowledge can be leveraged for the meeting. By showing you are the ones who are prepared to successfully navigate the financial hurdles that are bound to pop up, an investor is much more likely to feel confident about taking the risk.
4. Look to the past to solve problems
   One thing I don’t see often enough, is today’s startups doing their homework and looking into the history of successful companies in a similar marketplace. You might be surprised to see that some of the biggest companies around began with very modest funding. Mega popular home-sharing service AirBnB is valued at more than $2.5 billion, but it began with $20 thousand in angel investment. Recently, ZipRecruiter began sharing its growth story, from boot strapped lifestyle company to a first round of funding at $63 million. If you’re having challenges, are not sure how to tackle a particular hurdle or the right answer a question you’ve been receiving form investors, there is much to be learned from the history of your predecessors.

Funding can be achieved successfully if you’ve properly prepared. Too often to entrepreneurs get caught up in the excitement of their ideas that they forget to actually explain how they plan to achieve everything they’ve presented. Keep in mind these lessons learned and make sure you have the financial plan to back your idea during the funding process and you will be successful.

As a small business owner, you know it takes money to make money. To meet growing demands, you may need to increase your payroll. If you don’t have the liquidity to support hiring, consider borrowing options that can help you bring on new employees. A small business loan or business line of credit can give you the working capital you need to expand your team without restricting your cash flow for day-to-day operations.

Small business term loan

A business term loan can give you access to the short-term funding you need to cover hiring costs. Typically, it has a lengthier financing period than other borrowing options, which can mean lower monthly payments and more time to repay your debt. Term loans also differ from other types of small business loans, including equipment and real estate loans, because they can be used for any business expense. Lenders offer them with both fixed and variable rates, as well as a range of terms. If you opt for a term loan to increase your working capital, use a business loan calculator to get a rough estimate of how much you’ll be able to borrow.

Business line of credit

A business line of credit can be a convenient way to get the working capital you need grow your team. It offers you revolving credit, which you can use to pay your new employees. As they generate income for your business, you can pay down your balance, and reuse your available credit. A business line of credit can also help you maintain your buying power during slow periods. Like a small business loan, it offers you the flexibility to cover any expense.

Choosing the right working capital loan for your business

Before you start the application process, create a budget.  Review your expenses, seasonal sales, online business checking account balance and project commitments to figure out how much working capital you need to hire new employees. Then, speak with a lender to determine whether a loan or line of credit is better suited to your business’s needs and financial standing. You should see what borrowing options are available from the financial institution you bank with. Having an established relationship with a lender could improve your chances of securing a small business loan or line of credit.

Sponsored content was created and provided by RBS Citizens Financial Group.

Every business starts with a dream — something you’ve always wanted to do or create. As you invest time and money into your project, you may find you need financing to grow beyond marginal profits at six months to the booming profit-machine you dreamed up. Applying for a business loan may be the answer. With a small business loan, you can get the money you need to purchase your own space, hire new employees, manage inventory costs, get new equipment and cover marketing costs.

If this is your first time applying for a business loan, it may be difficult for you to obtain financing right away.  As a new borrower you’re more of a risk to lenders, but there are several tips that can help you prepare and present yourself as a prime candidate. Keep in mind, each lender is different and different rules and requirements may apply.

1. Outline the core elements of your business: Most lenders will want to know a little bit about you before loaning you money. A short summary should include your products or services, employees, competitors, current financials and plans for your future growth. You may need to provide records of your personal finances as well. 
2. Know what type of loan you need: Knowing the type of business loan and loan amount you need shows lenders you have done your research. Think about why you need the loan. Are you trying to grow working capital, purchase a new space or hire new employees? Using a business loan calculator can help you decide how large a loan you need and what type of loan suits your needs. 
3. Develop a relationship with your banker: Look for a lender who has worked with companies your size in your industry as they will have a better understanding of what you need. Communicate your goals and financial plans clearly and patiently. You may be emotionally connected to this project, but a lender is looking at it strictly from a risk-reward relationship. Helping them see your vision may help them be more invested in your project. 
4. Come prepared with answers: Your lender won’t be afraid to ask the tough questions, and you should be prepared to answer them. Know what you’re willing to offer as collateral for the business loan, what your risks are and how you plan to counteract them. Other questions to be prepared for are:               

• How do you plan to repay the loan?
• How do you plan to meet your projections?
• Do you have previous business experience and can you provide references?
• Can you support your projections with facts?

5. Maintain your credit and borrowing credibility: Before you apply for a small business loan, obtain a copy of your credit report and do whatever you can to improve your score. Show the lender you have a strong borrowing history with evidence of paying down student loans or car loans and making regular mortgage payments. It’s also important to show you have the resources to support the loan aside from the earnings of this business. Whether it’s in the form of savings, a spouse’s income or a co-signer, this will make you less of a risk.

Be confident and prepared when applying for a small business loan

Lenders want to see that you have a plan and a back-up plan. Go into your meeting with confidence in your strategies, and be open with the lender about any flaws or potential areas of risk. It’s also important not to go on the defensive. Accept any criticism they have and ask them how they suggest you improve in order to obtain the loan.

Dealing with repetitive creditor pressures and late penalties can be extremely stressful, especially when you’re facing multiple debts and have a great number of monthly obligations. When a company’s assets exceed its liabilities it is legally considered to be insolvent, at which point the risk of liquidation/bankruptcy arises. Many times the only way to save the business is to act quickly in determining a suitable course of action. Depending on the severity of the situation, one of the following three options should be able to help almost any struggling company escape insolvency as long as recovery is still a viable outcome.

Emergency Funding and Cash Advances

Invoice factoring might allow you to sell some of the company’s accounts receivables to a third party in order to generate some cash flow.  This is an ideal option if you have multiple clients who currently owe you money and are bound by contract to pay in the future. You can convert these future payments to cash quickly, and then use the funds to repay existing/overdue debts. With the help of an experienced insolvency practitioner you might also be able to gain approval for a secured loan by using some of the company’s assets as collateral. Although this would technically be the equivalent of creating a new debt to dissolve old debts, it does help the business by alleviating pressures and postponing or completely preventing any legal action taken against the company.

Company Voluntary Arrangement (CVA)

Even if you’ve already tried negotiating with creditors in the past, a professionally drafted and formally proposed company voluntary arrangement may offer a higher chance of approval. If this route is taken, an insolvency practitioner will create a proposal that asks the creditor to consider extending the length of the loan and/or accepting smaller monthly payments, in order to grant the company the leniency needed to make repayments without default. If the creditor feels that the agreement outlined within the proposal is feasible, they may agree to it, at which point they’d no longer be able to petition the court to wind up the company unless the terms of the CVA are violated.

Pre-Pack Administration

If the outlook is relatively poor and there doesn’t seem to be a prospect of recovery, the only way to continue operating the business may be to dissolve the company and have the current directors purchase the assets of the company during its liquidation. The directors would then transfer the assets to a new company in a process known as “phoenixing,” which bares its name because the new company essentially rises from the ashes of the old company, much like the legendary firebird. This is usually the last resort that is considered when recovery does not appear to be an option, as it does result in the official closure of the original company. However, it is also a preferable alternative to losing all of the assets (including clients, equipment, employees etc) that you’ve worked to earn with the old company.