Raising capital for your business - How long does it take?

Most companies underestimate the significant, the time commitment required to successfully complete a financing. In reality, a company needs to finance budget between 500 to 1000 hours of work in the capital-raising process, spread over a 6-9 month period.

The most important processes in the corporate actions process includes
1) perfecting the business plan, offering memorandum and other company due diligence materials,
2) a comprehensive, targeted prospectiveInvestor List
3) contacting this list and the response of investor due diligence requirements and
4) negotiating the transaction.

The components of the business plan typically requires at least 200 hours work. This is the time to carry out the research, is dedicated to review the possibility of developing a comprehensive financial model, determining the most effective way to lay out the business strategy, and actually writing and proofing the business plan.

The next step,a comprehensive, targeted prospective investor list is also very time consuming. There are thousands of potential investors, each very different tastes regarding the types of companies that interest them. Some investment market segment (for example) health care vs. telecommunications, stage (seed stage vs.) later, geography, or a combination thereof. Many hours must be spent to determine which investors the right fit for your company is involved. This process includesCreating a master investor list, visiting each investor's website to view investment criteria and investment of the past and determine who the right person in the company.

To see how quickly adds up the time to consider that only about 25% of the potential investors that an initial show of interest in a transaction actually progress to detailed company due diligence. Only about 10% of those 25% actually progress to a bonafide offer of funds, of which only 25% of real investment toTransaction. To complete a financing transaction requires, on average, contacting approximately 160 pre-qualified potential investors.

The due diligence process in which investors in the review of investments, but also very time consuming for the company. Investors often request many documents, some of them) are easily retrieved from files (eg, prior tax returns, while others more time to prepare (eg, additional market analysis, customer lists with past purchases,Contact information, etc.). Finally, negotiating a transaction can take a considerable amount of time depending on the complexity of the transaction and the number of parties involved.

Too many companies fail to raise capital because of the substantial time requirements, they are not doing this consciously. Those companies which to understand these requirements and budget accordingly, are the ones most likely to persist and end with the necessary capital.

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