6 Questions for Start-Ups Wanting to Raise Capital - Succession Plus

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6 Questions for Start-Ups Wanting to Raise Capital


6 Questions for Start-Ups Wanting to Raise Capital

By , July 11, 2016

Nowadays, fundraising is harder than ever for start-ups. Many companies rush into attempting to raise capital without knowing enough. It is arguably the biggest obstacle business owners face when converting their ideas into reality.

Often, we are working with business owners on a succession or exit plan. Part of that strategy is to grow through acquisitions and sometimes that includes raising capital.

Fundraising for mature, well-managed and profitable businesses is a vastly different prospect (and much easier) than raising funds for a start-up.  While start-ups and innovation should always be encouraged and supported with funding wherever possible, it is important to maintain a realistic perspective and so, start-up business owners need to ask themselves these six key questions:

1.     What problem are we solving? 

2.     Who are we solving it for, and how many potential customers does this include?

3.     What will they pay for the solution? –  what is the problem costing them now?

4.     How else is the problem being solved and why is my solution any better/quicker/cheaper/more effective?

5.     How do I plan to let my potential customers (the people with the problem) know that I have a viable solution and convince them to pay for it? And most importantly,

6.     Why do I need this money and how might we use it to grow the business?

Many conversations we have with start-ups don’t include any of these, but are some blue sky model which often involves a fantastically profitable spreadsheet. Skip that; create a short, sharp document that outlines the 6 key points above and your chances of successfully raising capital will greatly increase.

Here’s 10 terms you need to know before raising capital for your start-up.

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.