When fundraising, it is important to find the right capital partner who can support your goals. Finding the right lender or investor for your company is one of the most crucial things that you need to get right.
Capital partners do more than just help provide cash, because each and every investor and lender is different and can bring different values to your business.
Below are some questions you should consider when determining if a potential investor or lender is right for your company.
- What value gaps do you need filled, and how well can the investor or lender fill them?
The right investor or lender can bring insight and relationships to help you achieve your goals in addition to providing funding. This can come in the form of experience and connections in your industry, recruiting and vendor relationships or relationships to additional capital partners down the line. It is important to assess where your needs are and if the capital partner you are working with is right to help fill in your gaps. - The right capital partner will have time for and be committed to you.
Beyond just completing your funding round, by bringing on an investor or lender, you are bringing on a partner whose success is linked to your own. You should surround yourself with people who will champion your cause and support you through the ups and downs of your growth. You should ask potential partners how many other boards they are or will be serving on, how often they will be communicating with you and how they expect the dynamic between you both will work. - The right partner has the ability to fund.
While this may seem like a no-brainer, it is an important point to bring up as part of your fundraising process. You, like any other entrepreneur, have enough on your plate that you should not spend time pitching partners who have no ability to invest or lend in the end. Some things you can find out about potential investors and capital partners are:- When was the last time that they funded something was
- How big is their fund and how much left to allocate
- How their other investments are performing
- What are some successes or failures they have recently experienced
- Consider their investment time horizon.
Most investors and capital partners’ will have a target vintage for the money they contribute to your fundraise. You and your partner should have transparency when it comes to how long they expect to be invested before expecting significant returns or results and in what form they expect to receive their returns. You should be on the same page with goals and expectations from the beginning in order to support a lasting and mutually beneficial relationship. - How have they affected and how will they affect other people?
You should review your potential capital partners’ past relationships. What other companies have they funded recently? Do other entrepreneurs speak highly of them or are do they have a history of bad events when it comes to interactions with their portfolio companies? Great investors will have a strong network and credibility proving they will be a good resource to help you achieve your goals. The reputation of a capital partner should be an important aspect of whether you enter a business relationship as not all money is created equal. - Your capital partner should ‘feel right’.
A capital partner should be someone with whom you have a mutual level of respect and yes, even connection- this goes beyond the needs of just rounding out your fundraise. They should respect your brand and the culture you are working to create. You should work with people who you enjoy being around and value their opinions even if they differ from your own. People are unique and you want to be sure your partners have a similar goal-oriented mindset and respect your vision.
Accomplish your goals with Account FWD
At AccountFWD, we regularly support entrepreneurs who are raising equity or debt capital. We advise them on the right terms and situations for their business to support them in achieving their goals.
We’re a tech-enabled public accounting firm offering outsourced CFO, accounting and tax services. We deliver forward-thinking advice with personalized support and concierge level service. If you have any questions about your company’s capital and financing, schedule a time to connect, or give us a call 954-686-8687.
