Rapid Growth

Capitalisation Planning

Created on Saturday, 25 October 2008 04:04 Last Updated on Friday, 06 May 2011 11:37 Published Date Written by Small Business Can Hits: 1630

It is one of the most important responsibilities of the CEO to keep the business funded at all times. No funding equals no business. It's no harm, therefore, to understand a typical fundraising journey on the adventure that building a business repsents.
The start of the journey and the first funding milestone is the seed stage. This is the initial cash used to get the business off the ground - carry out research, invest in a product prototype, secure a strategic partner or win that vital first customer.

A key thing to remember is that when you realise your company needs money it may be too late. It should therefore be planned well in advance.

It can be described as the enterprise finding its way and figuring out if there's a business and a market with potential. The business is pre revenue. Usually the cash to fund this part of the journey is personal - very personal. It's the founder's money; it's his families or its coming from friends.

Local, national and even EU government help can also be sought at this stage and help may be available by way of feasibility funding, marketing help, assistance with developing a business plan.

Remember that from this stage, the firm will need to be valued, and too much funding can overly dilute the founders' stakes in the venture. The key is to know your growth track, determine your sales and profit benchmarks, and be shrewd when it comes to both the timing and valuing each stage.

Funding stages