Entrepreneurs always come across a prospect whereby they have to seal a potentially money-spinning pact. It may be a new endeavor to enter into or a spin-off of a new company. But problem arises when entrepreneurs are short of funds, which leads them to external borrowings either through a bank or through an independent investor / VC firm.In such cases, the entrepreneur would have to go through some check points. Only after an appropriate response received, would the investors decide to go forward to fund the entrepreneurs. 1) Business Credit availed in past: Entrepreneurs can expect funding from investors only if their suppliers, customers and creditors are satisfied that the entrepreneur has made good o what they owe them. Defaults and delays can be a stumbling block to secure funding from investors. 2) Collateral against Funding : The funding process considers the assets that an Entrepreneur can put across the table in lieu of the funds to be obtained from the investors. Of course, the investors would proceed for an independent appraisal of the collateral put forth, from various external agencies and authorities. 3) Just Investment or Investors on the Board: There are some investors who would love to be on the company’s board. They would like to know firsthand where and how their money is invested. 4) Numbers and Business Plan:The projected cash flows, the level of competition, the anticipated problems and methods to overcome those problems needs to be jotted down and documented. The investors would go through a Business Plan specifying how and where the funds would be spent. Hence an entrepreneur must be geared up with such documentation. 5) Social Media Presence: These days, it is inherent for any business to be present & be active on social media platforms. The Networking and communication skills of an entrepreneur, broadens the level of conviction and veracity in the minds of the investors. Although this is not an area of priority, it does make a difference to the brand the entrepreneur is promoting. 6) The Entrepreneur & The Team : Investors are always focused on three things before investing : The Talent, The Commitment & The Succession of the Management. 7) The Personal & Corporate Financial Status : The investors would not only dissect the personal financial tax statements & net worth statements of the Entrepreneur but also sneak a look into the cash flow statements, Balance Sheets & Income Statements of the company they would invest in. 8) The Threats of competition : The investors would see to the level of vulnerability of an entrepreneur to the new and aggressive competition the business would face . The probability of the competitors leveraging the existing weak areas of the entrepreneurs product or service is also calculated. Hence it is essential for the entrepreneur to do their homework before approaching the investors. A proper Business plan would do wonders of what the entrepreneur intends to do and what resources would be sufficient for the business to achieve its goals and objectives.
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