How to attract risk capital to my business?
Risk capital investors receive many proposals from different kinds of businesses to invest, but it is true that only several of them are actually financed. Investors are keen to select enterprises whose management has clear goals, thoroughly prepared realistic cash flow projection, carefully developed business plan and good communication and interaction skills. Thus before thinking about steps, which you have to take in order to attract risk capital investment into your business, try to clarify for yourself the following questions:
- Do you consider that your business have enough potential for rapid growth in competitive environment?
- Does your management team is strong enough and has necessary industry experience to develop your business successfully?
- Do you need to take mezzanine financing, which is subordinate to the other loans? Do you have suffcient free cash flow to cover this loan? Do you agree that this loan could be converted into the equities of your enterprise by the investor?
- In the case of pure equity financing, do you wish to sell part of your equity to risk capital investors, who will become co-owners of your business and will be actively involved in management process?