How to Raise Capital Like The Pros

So many entrepreneurs don’t have enough capital to fully pursue all their growth opportunities. Their bank limits the capital they can borrow and they don’t want to give up control of their business for the chance to grow. However, did you know there is always significantly more capital to invest than good companies to invest in? There are over 5,000 institutional funding sources sitting on over $200 billion in cash. That’s more capital than the value of Ford, Disney, McDonald’s and Dell combined! Knowing a few key strategies can help you get the financing you need at terms that are best for you.
Best Practices For Getting the Most out of Your Financing
In today’s market there are many potential sources from banks, venture capital, strategic investors, pension funds, insurance funds, investment banks, and public capital markets. The market and players are always changing but the approach remains the same.

Create a World-Class Business Plan – Practically every single financing revolves around a business plan. The business plan translates your Company’s needs and opportunities into numbers and perspective that should sell itself in the hands of prospective investors and financing sources. A good plan gives you the opportunity to a find a funding source that will finance your business based on YOUR needs rather than having to run back to the bank every year for a new loan agreement.
Access all available types of funding sources – Most companies know they can get debt from banks and equity from venture capitalists but often neither are great opportunities. Still, there are a variety of lesser known funding sources that live in the middle and offer companies added capital. Many of these financing sources such as SBICs, hedge funds, insurance companies, corporate development companies and other specialty lenders are not household names but are anxious to provide as little as a $1 million and up to growing businesses. Equally important, these type of financial products are often less expensive than equity and less restrictive than bank debt.
Solicit multiple funding sources – To get the best terms, companies have to shop for it. Like buying a car or house, it pays to shop around. It has been shown time and again that companies that create competition for their funding get better terms. But, the only way to get better terms is to play the numbers. Conversely, professional investors, wanting to get the best deal for their funds, tell you to value ‘relationships’ and only talk with them. Having competition can lower the cost of your financing by 25% or much more. Its not uncommon for the spread between proposals to be over 100%. That is because investing is not an exact science and terms are often influenced by the investors’ past experience and funding capabilities at the time of the investment. In short, having more than one institution courting your company can only help.
.Don’t offer terms – Along with competition, refrain from offering prospective investors any terms (sometimes called a ‘term sheet’). If you tell an investor you are willing to give up 25% of your company for $5 million, the negotiating will start there. If you make investors bid back to you, you may be surprised by the terms. Interestingly, capital brokers often encourage clients to put in a term sheet, because it makes the financing easier to close, even if it’s undersold.
Aggressively negotiate financial covenants – Don’t be afraid to negotiate any covenant or term of your agreement. Most of our clients want to limit or eliminate personal guarantees. Many don’t realize such covenants are negotiable and with competition can be eliminated. With the right funding sources, companies can actually INCREASE the size of their loan while DECREASING personal financial risk.
The financial world is Greek to most entrepreneurs and many investors work this unfamiliarity to their advantage. But, if entrepreneurs just approached financing like they would buying a new house or car, they stand to get the best possible terms for their business.

Raise Capital :Visit Lantern Capital Advisors