Access to Capital

Happy New Year and welcome to 2007.

Is Capital enough in and of itself to grow your business successfully? The key word here is “successfully”. A successful business is one where the growth is sustainable and manageable over the long term. 

The answer obviously is ‘No’; Capital alone is not enough. Is it important? You better believe it but Cash alone is not the Holy Grail. There are things you need to do in order to attract capital in the first instance and then there are things you need to do with that capital once you have it in order to create sustainable growth.

The key component I am talking about in all this is people. People make things happen. The right people, in the right place at the right time; DOING THE RIGHT THINGS, will make an incredible difference on your business and its success. This is not an easy task but it is critical. Here are just three of the many rules that you need to consider:

1. Don’t be a one person band.
You simply won’t raise capital or grow a business as a team of one. If you are a team of one then get ready to change. If you are not a natural leader of others then find someone who is and take your position next to them. I would personally be happy to have a portion of a business run by a successful business leader than all of a business that is worth nothing and going nowhere.

2. Know your limits, skills and experience.
Unless you have successfully run a business and you can show this clearly then don’t try and raise capital. Investors want Proven Business Acumen. Remember investors have the choice of over 1700 listed investments and more than 1000 Share Funds managed by some of the most experienced and intelligent people on this planet. (Not all of them, mind you, but the cream does rise to the top). So this is the market you are competing in for investment funds.

3. Be ready, willing and able to take sound advice.
The key here is knowing when you are actually on the receiving end of sound advice. Everyone has an opinion. Be careful to sift through the information and hone in the right advice. When you are comfortable that you have the right people around you giving you sound advice then ACT ON IT! If there is an already proven system and all you need to do is follow it. Then follow it.

Some of the most successful people in the world today understand these 3 rules (there are others of course). Don’t be fooled into thinking that successful people somehow broke all the rules. They might have bent the rules or made some variations on the theme, but when you dig deeper you’ll discover that they applied fundamentals and logic to their creativity and came out with a successful business. That is what investors want and if you want to attract them then stick to the rules.

All the best for 2007. We hope that you achieve the success you desire, and perhaps you could be the next Wotif or Oakton. Good luck and if you have any questions about the pathway to successful Capital Raising then drop us a line.

Kind Regards,

Andrew Winter

Access to Capital

Andrew Winter is an Experienced Business Development Consultant specialising in helping companies grow through establishing and implementing sound capital raising strategies.

AccessToCapital has a range of experts available in Capital Raising and Business Development to assist growing businesses.

Well I cant believe its been so long since I posted an article on the site. We are still getting heaps of enquiry, questions and feedback so please keep it coming. In response to some of that enquiry I have posted another web site that is managed by the Federal Govt and it is called www.ipaustralia.gov.au .

There are a lot of questions that we field about Intellectual Property and how best to protect it so please go and have a visit to this site and start the learning curve.

So what have we been up to? Well we have recently completed two successful Round 1 Capital Raisings for two new business start-ups and both of these businesses are now moving ahead into Round 2 and beyond. Today’s article is a result of something that happened during the activities surrounding those Capital Raising projects.

On more than one occasion the process and valuation base of the Offer that was being marketed by the Business Owners was questioned by the supposed Professionals. Statements like: “Oh I don’t think you are doing it right” and “There is no way you will get people to invest based on your offer” and “How can you justify the pricing of your business model” etc etc. I was completely stunned and realized that given the supposed professional advice being dished out, is it any wonder that we still end up taking much of our Intellectual Property overseas to be Commercialised only to import it back into Australia.

The fact is; that contrary to the professional advice provided both of these businesses went into the market and between them raised over half a million dollars in just over two months and are on their way to another half a million dollars in the coming weeks.

Let’s get something straight. There is no right way or wrong way to raise capital! There is legally compliant ways and there are illegal ways and the Corporations Act 2001 and ASIC exist to ensure that fund raising is a legally compliant process that minimizes risks to the individual investor.

So long as you are compliant with the law then the only body that exists to define whether or not you are “Doing it Right” is: THE MARKET. Yes we actually live in a market driven economy and I want everyone to right this down so you can recall it when confronted by the doomsayers, the bureaucrats and the suits in their ivory towers: THE ONLY TRUE MARKETING GENIUS IS THE MARKET ITSELF. Thank you to Alan Stewart, one of the most outstanding marketers I have ever met for drumming that statement into me as a mentor to a student should.
 
By all means get good advice and ensure that your T’s are crossed and your I’s are dotted. Consider your long term strategy and consider the realistic value of your business opportunity. But truly there is only one final decision maker and that is out there in the market place. If you cannot convince the market that your business has the potential and underpins the value that you are suggesting then the response will be simple: NO ONE WILL INVEST. This is called true market research.

If this occurs then you must listen to the market and if it is aligned with other advice then it might in fact be the right advice. But beware the lazy opinion. Every one has an opinion and some people have more than one on any given subject. Facts are market based. If you are too stubborn to listen to the market then you have no business being out there trying to raise capital. But do the research, find out if it has legs and then go and plan accordingly.

Failure to listen to the market will result in your peril. Taking heed of so called Professional Opinions before going to the market can be equally perilous.

Good Luck and Best Wishes

Andrew @

Access To Capital

Andrew Winter is an Experienced Business Development Consultant specialising in helping companies grow through establishing and implementing sound capital raising strategies.

AccessToCapital has a range of experts available in Capital Raising and Business Development to assist growing businesses.

Sorry to disappoint if you thought this was going to be a piece on something of a more romantic nature. I am sure if you look hard enough on the internet you can find material of this nature.

When we talk about going all the way its about asking this question:
Do you have a vision and desire to see your company capitalised, liquid and your investors (including yourself) having the ability to undertake unrestricted buyer offers and sales of securities in your company? In other words do you see yourself achieving a listing of your business on an exchange?

YES or NO?

The answer to that question alone can singularly determine the success or failure of your ability to raise capital. As I have mentioned before there are, at any one time, over 10,000 businesses seeking some form of capital from the market. Less than 500 accomplish this successfully. One of the reasons a Small or Medium Sized Enterprise (SME) will fail is that they are not prepared to go all the way.

Let me explain: Investors are in the box seat. They are inundated with requests for potential investment. What do they have to choose from:
Managed Funds; Locally and Globally representing every possible asset and risk class.
Property: Directly or Indirectly.
Own Business
Other Businesses through Private Equity Placement
Other Large Businesses through Local and Global Sharemarkets

The list goes on and the spruikers are hard at work trying to lure investment in all manner of opportunities. So as an SME you are competing against each of these investment types. In order to attract investment you then need to be prepared to do whatever it takes to attract that investment and one of those is planning for ‘going all the way’. You might never get there, you might build a successful business for you and your investors without having to list but you should plan for it none the less.

Why? Because if an investor is asked to choose between a closed option with no exit strategy and an open ended plan that wants to go all the way then 98 times out of a 100 the open ended plan that goes all the way will attract the investor.

There are key fundamentals to raising capital. If you avoid the fundamentals, like most things in life, then you are setting yourself up for a more difficult task. Bear in mind that you are already facing an uphill battle by deciding to go to the market to raise funds in the first place. So be prepared to be open, transparent and have a plan to go all the way.

On another matter I would like to thank all those people that email in their questions and ask for more information. Obviously we try to respond to as many as we can but we are by no means the experts on every subject. That is why we have added another two web sites to our links for you to get some value. The first is a site Catapult and is run by ABC Australia and has a great Q&A section for innovators and inventors. The second is an American site called Entrepreneur.com and is a good resource centre for all manner of starting and growing a business.

We keep looking for great material all the time. Australian Anthill Magazine have even started contributing and their first article is now in the File Cabinet. If you have any ideas on where we might find good content and links to quality sites then please send them to us and we will continue our commitment to education and information through this site.

Good Luck and Good Business

Andrew @
Access To Capital

Andrew Winter is an Experienced Business Development Consultant specialising in helping companies grow through establishing and implementing sound capital raising strategies.

AccessToCapital has a range of experts available in Capital Raising and Business Development to assist growing businesses.

No not the 80/20 Rule but the 95/5 rule. In the world of capital raising this is what the statistics will tell you: 95% of all businesses that are seeking to raise capital will fail to do so and ultimately suffer at the hands of desperate decision making.

At any given time there are as many as 10,000 businesses out in the market place seeking capital. These are solid numbers based on statistics provided by the Australian Venture Capital industry. Of these less than 500 successfully raise any capital to grow the business opportunity that exists.

I was asked recently how much investment capital there was available in the market today. The answer is Billions of Dollars. And that is just in Australia. So the next obvious question was : Why doesnt this money get invested? It is not a lack of funds that holds back private capital investment. It is a fundamental lack of quality offers. The two golden rules simply fail to materialise consistently and professionally:
BE INVESTOR READY
BE INVESTOR FRIENDLY

In Marketing we teach people to sell benefits. We teach this because everyday business owners fail to do it time and again. If you are going to raise capital to expand your business or develop a new business then you must first create the benefits to the potential investors then sell them professionally. What are some of the benefits that an investor is looking for: 
1. Going all the way: If you do not have a plan to undertake multiple rounds of capital raising and continue to broaden your shareholder base then this will fail to excite investors. Investors want a growth business that will one day list on an exchange: Either ASX or NSX. Start planning with that in mind. You may end up in a Trade Sale before then but the goal must be to continue to raise capital and grow as fast as you possibly can.
2. Have a Management Team: It has been said time and time again by the investment community that they would rather invest in an A Grade Team with a B Grade Idea than an A Grade Idea with a B Grade Team. The majority of start-ups fail due to a lack of management professionalism. Build good management and if it doesnt exist then raise more capital in order to pay for the management team to come on board.
3. Think Big: Similar to my first point. Investors want to know that you have a BHAG. A Big Hairy Audacious Goal. That you are prepared to do whatever it takes to implement that goal is a huge benefit to the potential investor. Too often the business owners and entrepreneurs are too conservative and moderate and so fail to excite the investor into parting with their funds.

If you are seeking investment capital in your business then start creating the benefits to your investors and then start learning how to sell your benefits to them. It is a highly competitive environment and you do not get too many chances. Would you rather be one of the 5% or one of the 95%?
The question I most often ask people who are seeking to raise capital is; “What do you want?” It is a very simple question with no mixed signals. The surprising thing is that most people simply dont know. We live in a country where complacency and choice abound. That is truly a blessing but it is also a curse. Ask yourself what it is you truly want. What would satisfy and content you, your family and your lifestyle. Control is not the most important thing in the world. Outcomes are and sometimes if you set a BHAG and only get 80% there then most people would be satisfied with the outcome.

The purpose of starting any business is to sell it. In the words of Steven Covey you must therefore start with the end in mind. If more businesses were started with this in mind then more businesses would succeed. Forget about control and start thinking about lifestyle. If you can become one of the 5% and are prepared to do what it takes then your chances of success are already exponentially better than they were previously.

There are alot of people out there who are most definately looking to feather their own nest. Be wary and cautious! But dont be so wary that you miss out on taking good advice. Some of the links on this site will lead you to independent sources of advice and that is something that I am a strong advocate of. But please take the advice that is given. A client of ours was a part time security guard 4 years ago earning $15 per hour. Now he has a net worth of over $40Million. Mainly because he was willing to take good advice and focus on the fundamentals of raising capital successfully. He is one of the 5%’ers.

Good Luck with Raising Your Capital and Your Entrepreneurial Endeavour.

Andrew @
Access To Capital

Andrew Winter is an Experienced Business Development Consultant specialising in helping companies grow through establishing and implementing sound capital raising strategies.

AccessToCapital has a range of experts available in Capital Raising and Business Development to assist growing businesses.

I have done alot of research recently on sources of information that are critical for the success of Entrepreneurs and Business Developers. A source that I have recently subscribed to and been more than happy with in terms of value is Australian Anthill Magazine. I recently met with James Tuckerman, the publisher, and there is without doubt some great value information coming our way courtesy of Australian Anthill.

I received this offer via email recently and was compelled to pass it along to all of our subscribers. If you are on the lookout for a great source of knowledge and information then check it out. 

Dear Anthillian,  

Need a venture capitalist?   

In the dying days of September 2005, Australian Anthill Editor, Paul D. Ryan caught up with five of Australia’s leading early-stage venture capitalists.  

The meeting turned into a feature story. The feature story turned into a networking event. And now it’s available as a 90-minute audio CD!  

We are making this evening available in audio format, as a hard-cased CD, to new subscribers (and existing subscribers wanting to extend their subscriptions).  

Subscribe before 7 April (that’s 10 days away!) and you will receive this new audio CD for FREE!   

So what’s on offer…     

• Subscribe for $33 (and receive a 12 month subscription to Anthill magazine)
• Save more than 30% off the cover price (never pay newsagent rates again)
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• And… receive a 90-minute audio CD for FREE! 

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Listen, at home or on the move, as five of Australia’s leading early-stage venture capitalists speak their minds (and answer your most burning questions). 

The information provided on this 90-minute audio CD is live and uncut – exactly as it happened.

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“You need a bank up until the day they lend you the money and then they need you. It works for venture capital as well.” David Landers, Allen & Buckeridge

For further information, please don’t hesitate to call me on (03) 9428 3777 or…

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Ph: 03 9428 3777 Fax: 03 9428 3344 
www.australiananthill.com

Dont hesitate to contact Scott or the guys at Australian Anthill to tap into this great resource.

Regards,
Andrew @
AccessToCapital

For the last two weeks now I have taken a great deal of interest in a new television show called The Dragon’s Den. This show is a pitching contest where the owners and developers of business ideas present their case to a group of diverse and successful Australian Business people.

Now this isn’t a new concept. The Dragon’s Den show originates from the UK and variations of the same are conducted around the country behind closed doors with no cameras. These are called private equity or angel investor meetings.

My concern mainly is that under the pressure, the lights and the glare and probing of the Dragons I have to ponder the question: “Why give up so much for so little.” I have been more impressed with those business people who have stood firm and avoided the Dragon’s Den challenge. My applause to the girls at LustyThreads.com who once again pulled of another great PR campaign and from what I hear the phone’s were ringing hot the next day.

But back to business then. OK so without doubt there have been some businesses that should not and could not get funding. That’s life and barring a few exceptions they have recieved very polite ‘by your leave’s’ from The Dragon’s Den panel. There have been a few though that had to give away some serious chunks of their business in order to get their hands on the investment capital.

It comes down to a question over funds, networks, skills and experience. In the case of the Dragons a succesful pitch could result in all 4 key ingredients being injected into the business. This is the missing piece of the value equation. But here is the catch. There are 5 Dragons in the Den. In two episodes they have collected 50% of 2 businesses and 80% of 1 business. If there are 10 episodes then it stands to reason that by the end of the series there will be 15 businesses that the Dragons have to collectively add value to, along with the cash of course. Whilst at the same time they still have to operate their own businesses.

So beware your delivery to the Dragons Den. Most expectant business people I speak to these days have this built in pre-concieved idea that the money, the skill, the experience etc all has to come from one person, one source. This is far from the case. Seperate your shopping list. It’s easier to find money in small stages in smaller amounts of capital. It’s easier to buy top quality business advisers who have been there and done that than to try and find the right one who also wants to invest half a million dollars at the same time.

As a Business Owner seeking to raise capital consider the options. Do your homework and at all times if it looks like a Dragon, talks like a Dragon and acts like a Dragon then the chances are, cameras or no cameras, you are standing in The Dragon’s Den.

Good Luck

Andrew Winter

Andrew Winter is an Experienced Business Development Consultant specialising in helping companies grow through establishing and implementing sound capital raising strategies.

AccessToCapital has a range of experts available in Capital Raising and Business Development to assist growing businesses.

Few Business Owners/Managing Directors of SME’s in Australia have a great deal of understanding of structure, form and layout of an organisation. Often we hear the words “investor ready” and this is very true and is a critical component. But so is Investor Friendly.

There is no “failure to provide a market” at the SME level, merely a failure to educate the entrepreneurial public of its existence. In addition Business Owners need to understand how they could use shares as a type of ‘currency’ for their business being able to swap them for financial capital, intellectual capital or human capital.

We are often told in Australia that there are no investors available to pursue equity capital for the SME sector. In reality it is the opposite. The investors are out there waiting to be educated and waiting to be given an investment opportunity that has the makings of a successful growth business. In order to find them however takes hard work and a solid marketing plan. If you dont believe me then look at these figures for the Newcastle Stock Exchange over the last two years:

In November 2003 there were 13 Listed Securities on the NSX with a market capitalisation of $97.2M. Not quite two years later in September 2005 there were 45 Listed Securities with a market capitalisation of $321.6M. Now this doesn’t happen without investors so the fact is the opportunity exists.

Australia is a nation of gamblers. We are also a nation of investors. You dont need to have the hottest thing on the market to attract business investors but you do need to be able to take good advice. If you cant then stick to what you are doing and do it well and you may just get lucky. However if you want your business to grow and be bigger than you are then start to think about how you will differentiate it from all of the other business investment opportunities you are competing against.

In closing let me put it this way: If I were an investor and I had two different types of businesses wanting my capital investment and one said: “I just want to get some money to get started in business and then I would be happy to just progress from there. I really dont want to share my ownership or control beyond that. ” and the other said: “I have a 3-5 year business plan to continue growing, raising capital for expansion and ultimately listing on the Newcastle Stock Exchange or even the ASX.” As an investor I am immediately attracted to the second option because I have a growth plan and exit strategy to sell down my initial investment once the company is listed.

Now neither scenario may succeed. That is the nature of business investment. But regardless of the product or business model I am investing in the latter of the two offerings is more attractive to me because it will be supported by a structure and layout that is Investor Friendly. This is a key failure in the business community when trying to enter the private equity market for the first time.

If you want to know more about the Newcastle Stock Exchange go to the free resources section where you can access some valuable information about the NSX.

Andrew Winter is an Experienced Business Development Consultant specialising in helping companies grow through establishing and implementing sound capital raising strategies.

AccessToCapital has a range of experts available in Capital Raising and Business Development to assist growing businesses.

It is illegal for any person (or company) to ask a number of people to invest in a shared business venture, property or other investment without following the fundraising rules set down by the Corporations Act 2001, or without utilising the exemptive relief such as that provided by properly licensed and accredited Advisors.

A Accredited Member of The Small Scale Offerings Board assists Small to Medium Enterprises (SME’s) to raise capital through the issue or sale of equity or debt securities. An Adviser provides the SME with two main facilities - the legal exemption to issue or sell securities or scheme interests and the appropriate framework for doing so without breaching the share hawking provisions of the Australian Corporations Act 2001.

Offers to issue (alot) or sell (transfer) securities or scheme interests in SME’s can be made through The Small Scale Offerings Board (a registered entity and trademark of Quantum Business Securities) and through investor meetings conducted by an exempt Accredited Adviser.

Each SME listed on the Bulletin Board is restricted to a maximum 20 investors in 12 months on their share register, with issues or sales not exceeding $5 million in value.

The Bulletin Board identifies investors and potential investments for investors. It operates as a business matching or introduction service, but is not an established market for the sale or purchase of securities.

If you have a business that is looking to expand the Company’s shareholder base beyond the 20/12 rule, then you could look at the Bulletin Board as a springboard to acquire as many investors as allowed (under The Act), prior to having the Company graduate to a stock exchange listing. A stock exchange provides the Company with a share price quotation. It facilitates unrestricted seller offers and buyer bids on the issued capital of a company. Todays Bulletin Board stocks are tomorrow’s potential stock exchange listings and the types of investments that astute investors will be seeking to acquire.

Everything man ever created started as a thought, an idea. The universal subconscious mind can produce the ideas and solutions you need to solve any problem or develop a world-beating product or service - you only need ask your mind and it will comply. Innovation is the lifeblood of growth but the best idea or product cannot be developed and grown without the capital. Cash is still as intrinsic to the successful outcome as the idea.

With many larger companies continuing to downsize, the importance of nurturing smaller growth enterprises has never been more crucial to our economic future. That is a Global consideration.

Andrew Winter is an Experienced Business Development Consultant specialising in helping companies grow through establishing and implementing sound capital raising strategies.

AccessToCapital has a range of experts available in Capital Raising and Business Development to assist growing businesses.