Although there is much investment capital available in Australia, raising it can be a tough road for entrepreneurs, particularly for early stage or start-up companies.� Australian investors can be described as more conservative when compared to their American counterparts.�
The reasons for this conservatism can be attributed to one or more of the following reasons:-
- Many investors have lost their money on past ventures, especially technology.
- The Australian market is smaller and more fragmented when compared to the US, or Europe
- The pool of genuine angel investors in Australia is small and hard to access.
Tips for Raising Capital
Here are some tips which will help to make your road to capital raising an easier one:-
- Understand your marketplace thoroughly and who your direct and non direct competitors are.�
- Meet as many investors and VC firms as possible, even before you are ready to raise capital.
- Get to know the investors requirements and appetite , particularly� if they have funded any companies that are competitors
- Be clear on how much you are asking for, what the funds are to be used for, and how much of the company it will represent.� You must totally justify this valuation. Value is where most negotiations fall down.
- Once you have agreed in principal, get a term sheet or heads of agreement signed by both parties.� Then work through necessary due diligence towards the point of funding.�
- Make sure you have adequate legal representation on your side.� It's never cheap but it�s not as expensive as the alternative should things go wrong.�
- Make sure your lawyer has previous corporate and capital raising experience.
TIP:� Don't forget that 20% of something successful is better than 100% of a failed venture.� In most cases, successful companies are built on a base of investment capital so don't be afraid to give up some of your hard earned equity to ensure your business idea has the best chance of success.
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