Finance

7 Keys to now When Raising Joint Venture Equity

Finding Joint Venture Equity has always been one of the most difficult things to do. To help you along with this process, we thought we would share an article that was written by one of our strategic partners.

Article by, Brent Virkus of Find the Capital

Look we all know raising joint venture equity is not easy. This is actually a good thing. Because if it were easy, everyone would raise capital and start a business, buy commercial real estate as an investment, etc. Competition would be ferocious.

For this article, I’m going to focus on raising joint venture equity for your business. So to better help you with this process I’ve put together the 7 things you must know to raise joint venture equity today.

 

First…and Most Importantly Have “Thick Skin”

When raising joint venture capital, be prepared for a lot of “no’s.” Using my Google example, even when Google was ready for venture capital, the majority of venture capitalist said “no.”

When an joint venture capital says “no,” it doesn’t necessarily mean that your venture is not a good one. It simply means that the venture is not a good investment fit for them. You must have “thick skin” and be able to bounce back from lots of “no’s” and persevere.

When failing over and over again to create the light bulb, Thomas Edison famously said, “I have not failed. I’ve just found 10,000 ways that won’t work.” Have the same mentality with investors. That is, think, “I have not failed. I’ve just found 100 investors that aren’t a good fit.”

 

Second…Make Sure you do a Business Plan and Keep it Current

One of the most important things to show in your business plan is what you’ve accomplished in your business to date. And ideally, every month you are accomplishing more. So, be sure to update your plan with this progress.

 

Third…Always be a Master Marketer of your Deal

In raising money, the best company doesn’t always win. Rather, the guy that knows how to best market his opportunity wins. That is, the entrepreneurs that are best able to market their companies to lenders and investors are the ones who raise the money.

 

Fourth…Understand That Funding Doesn’t Take Place All At Once

No matter how great your project or idea is, you are probably not going to get a $20 million check right away. Rather, you will typically raise several “rounds” of capital.

You start with a smaller round or amount of funding. Then, as your business grows, you are eligible for larger rounds of funding. This is because your business proves itself over time and your valuation rises as you grow. This enables you to you to raise larger sums of money.

 

Fifth…Choose the Proper Source(s) of Capital Funding

Choosing the right source of funding is the key to Find the Capital’s success at raising joint venture equity. Some forms of funding are much easier to raise than others. And based on your stage of development, different forms of funding are more relevant.

To be specific, the funding sources available to a pre-revenue startup are very different than the sources available to a 3-year old company generating $1 million in annual revenues. For example: Google initially failed when it tried to raise money from venture capitalists. The key is to go after the right sources of funding at the right time.

 

Sixth…Build your Joint Venture Capital Source Relationships Early

The bottom line is the perfect entrepreneur/joint venture relationship is one where each has established respect and trust with the other well before an investment transaction is broached.”

The key is to build these relationships early. So, even if you don’t qualify for a $5 million round of joint venture capital today, start meeting with capital sources so they are more familiar with you when you do qualify a year from now.

 

Seventh…Don’t be Afraid to Change

While you must have “thick skin,” that doesn’t mean to be foolishly stubborn. What I mean by this is that if you hear the same feedback from capital sources over and over again, you shouldn’t ignore it. Rather, you should adapt.

For example, if several prospective investors tell you they want to see a sample of your product or service before considering funding you, do what they asked for and create it for them. Don’t just plow forward with contacting more and more investors in this case.

By adapting to the needs of joint venture equity partners, particularly when you hear the same feedback multiple times, you can make the requisite changes to raise the money you need.

 

CFO SERVICES – GROWING YOUR BUSINESS AND MAKING MORE MONEY

Article by, CFO Service

You are an entrepreneur; a forward-thinker. A doer. You own a company. It might be small, but it’s growing. You are doing great, right? But could you be doing better? If you are the owner of a small or mid-size company and you aren’t using CFO services, you are probably missing out on ways to grow your business faster and make even MORE money.

WHAT ARE CFO SERVICES

CFO services are financial management activities that enhance performance, facilitate growth, and improve profitability.  Specific CFO services include strategic planning, financing, forecasting, risk management, etc. These services are typically performed by a CPA with significant industry experience.

BUT I HAVE A CPA FIRM. I DON’T NEED CFO SERVICES

CPAs are NOT CFOs and they are usually only telling you where your money is going; not how to grow your business or make more money. You typically use a CPA to create financial statements, prepare tax returns, and a host of other valuable services. They are crucial to a well-run business but they are typically not going to grow your business or help you make more money.

BUT I HAVE AN ATTORNEY. I DON’T NEED A CFO​

Your attorney’s main job is to make sure you don’t break any laws or get sued. Most attorneys are NOT going to tell you how to expand, grow, or further monetize your business. Do you need an attorney? Of course. No one wants to make crucial legal mistakes. But an attorney doesn’t take the place of a CFO.

CPAs and attorneys are both – generally – conservative. It’s likely neither will actually TELL you how to make money.

SO HOW DO I KNOW I’M READY FOR CFO SERVICES

The answer to this question isn’t a one-size fits all. Some businesses need CFOs early in the game and others can wait.  The real question is are you growing fast enough and making enough money?  If the answer is no, a CFO is probably the solution.  But for most small businesses, when you are ready for a CFO, there might not be money to hire someone full-time. So how do you have a CFO but not pay out the nose?

There are a number of companies that specialize in CFO Services (see www.dynamicadvisorysolutions.com). These companies pair financial experts with business owners in need of financial and accounting help. If you need more expertise – if you need a CFO – you can typically have one at your fingertips for a low monthly fee.

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