Could raising capital enable your company to a future exit event?
At some point in owning your business, you might consider raising capital to help accelerate your growth. Your options could include getting a loan from family/friends or a bank but often times these options have limitations that lead you to finding a capital partner that is seasoned at partnering with businesses to fuel their growth.
If you’re thinking about whether raising money from a capital partner makes sense, here are some initial questions to consider:
- Have I identified what good looks like for my business years from now (i.e.: what type of exit I’d like) and how does raising capital from a third party help me accelerate achieving that desired exit?
- Is the dollar amount I would want to raise enough to attract a capital partner or is it too small for what they would find of interest?
- Have I developed a plan for what I would do with the money raised? Can I show a capital partner that I know how to deploy the funds?
- Can I show a capital partner that my existing business has as solid track record of performance to give them the confidence I will deploy the invested money effectively and with a high probability of delivering a solid return for them?
- What decision making authority related to running my company am I willing to give up to a capital partner?
- In taking my company to the next level of growth, what experience do me and my team lack but could fill the gap with a capital partner that brings money and expertise to the table?
- How would a capital partner work with my team or do I want my team insulated from a partner?
- If I have a capital partner, will I be able to continue blending quality of life and quantity of life (i.e.: taking vacations whenever I want) in running my business or will their expectations change my quality or quantity of life balance?
- What specifically am I looking for in a partner – what experience and capabilities would I want them to have and what role do I want them to play? What successes within my industry do I want them to have to build my confidence that they are the right partner with a solid performance track record?
These are just a few of the questions you’ll want to ponder before you consider going this route. Raising external capital to fuel your company sounds great and it very well could be but it also comes with challenges and risks. Go in with your eyes wide open and begin by answering these questions for yourself. Think about what good looks like one day when you sell your business and then determine if you need a capital partner today to help you get there.
