Why Raise Investment?
Why do companies raise money?
If you are starting a business or growing one, you will need cash. Until you have established enough trading income it takes other forms of investment to get the capital you need to set up and grow.
You can use investment to fund such things as sales and marketing, exploit a new market, recruit key individuals, buy assets to improve productivity and profitability, invest in research & development or simply buy the time to establish the product and build the sales.
When do companies raise money?
“We don’t need money; we’re making a profit”.
Too often companies only try to raise money when cash is becoming an issue. The time to raise money is before the business needs it. That way the investment goes into growth and not to buying a life-line.
Picture the ideal position for your business in 3-5 years time. Highlight the obstacles currently preventing you from getting to that position. Calculate the cost of overcoming those obstacles and consider raising that money to allow you to get to your ideal position.
Why do investors invest?
People and organisations with money use their money to make more money. Those who have money, lend it to those who don’t for a rate of interest or a dividend. All financial markets exist to facilitate this single function and growth investments are no different. The rate of interest or dividend and payment terms will depend on the type of investment but in general the greater the perceived risk, the greater the reward sought by the investor.
Where do I start?
The world of growth investment can seem complex and daunting, so many companies shy away. And yet investment can accelerate the growth of a business far more than any other single intervention. For many early stage companies it is the only option.
A little research will give you a much stronger position, so if you’re looking to raise investment we suggest you start here and take a look through our education section.
We start with the basics. Then you can move on to the library and explore in more detail. Then, when you’re ready, get in touch with one of our many specialists.
Here are our four introductory articles:
What are the types of investor?
How is an investment opportunity assessed?
Who are the other parties involved?
What at the processes and stages to raising finance?