Access to Capital

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 was recently sent an old copy of a publication called:

A Better Mousetrap; A Guide for Inventors by Peter Bissell and Graham Barker

I would like to thank one of our avid followers for doing me the courtesy of sending this along. Well done Roc, you know who you are. It is a fantastic resource and after reading it I thought about how I could perhaps make some attempt to publish it on the site.

My very quick online research led me to the site: http://www.abettermousetrap.co.uk/ 

This is the site managed by the authors of the original publication and through it there is now a comprehensive book that they published in 1998 called The Business of Invention - a step by step guide to turning an idea into a commercial product.

Now as we field many enquiries about various ideas here at AccessToCapital I am a big believer in making available any signpost or piece of information that will help people out there commercialise their Intellectual Property. Having read the 32 page Second Edition of this publication from 1990 I can only imagine then how good the book would be. OK so its a UK publication and some of the information will be UK centric but the fundamentals are the same all over the world and if you dont pay attention to the fundamentals then you are better to pass your idea onto those that know how to commercialise products.

Remember its all about education. So whether you get this publication or use the resources on offer at many of the places we have recommended on this site then keep getting the information you need to make smarter decisions.

Best Wishes

Andrew @

AccessToCapital