How do I raise money in this environment?

Dear Aunty B,

I put in about $2 million at the start of our venture and we have been expanding through our own cash flow, which has been tough and left us with many sleepless nights.

We have now reached the point where the board has decided to raise a further $2 million to help fund our overseas expansion.

The board meeting finished in a hurry and I was left with the sense it was up to me to raise the money. I have never done that in the past and wouldn’t even know where to start especially with all the gloomy news about the lack of finance for businesses.

Any pointers Aunty B?

Dear Any pointers,

As you said, the board meeting finished in a hurry. Your board directors would certainly not expect you to simply hit the streets with a busker’s cap. They know your experience so they certainly don’t expect you to turn up next week with $2 million in the coffers.

Your first step is to call the board members and ask them for direction. Ask for the names of advisers/investment bankers who specialise on raising capital in your industry.

You can also call your accountant and ask for contacts because they may even have a client who is looking to invest.

Your two big questions are which adviser to choose and the agreement you put in place with that adviser. Do you pay them a retainer and a commission or merely a commission on the funds they raise – that sort of thing.

Once those questions are put to bed and the agreement with the adviser is signed, then he or she will walk you through the process, telling you what is expected at each point.

Don’t be afraid to ask your board members for tips on raising capital. Or ask for introductions to people whom are familiar with the process. And there is a lot of information on SmartCompany about raising capital, so read up.

Finally, you say it is a difficult environment in which to raise money, but a fast expanding company with a global product is a pretty good investment compared to putting your money in the share market, into managed funds or even into property at the moment.

Be smart,

Your Aunty B