Most of the attendees at these functions were founder owners of companies with company profiles involving thirty or more employees and revenue streams around the $10 to $20 million mark. There was no doubt that as a group they were committed and enthusiastic about growing their businesses and recognised that they required a significant capital injection in order to reach and achieve their vision of where they wanted to position their company in the future. However their lack of understanding of how to prepare the required documentation and what was involved and required in terms of presentation before an investor would consider making an investment in their company was abysmal.
Companies requiring growth capital fail to realise that investors have multiple choices of where they invest their funds and therefore the quality of the information provided and the professional manner in which it’s presented are paramount in gaining the attention of suitable investors. A number of the conference participants complained that there were no investors out there but when questioned admitted that they hadn’t really prepared anything for presentation other than provide the latest balance sheet and a couple of pages of financial projections.
When I explained the detail that was required and that it would involve some initial funding to undertake the preparatory work and professionally prepare the presentation the general reaction was one of shock at the amount of work involved, the information required and the professional presentation standard expected. It was obvious the majority had no idea of how to go about attracting a suitable investor and yet these are the very type and style of companies that in the future are going to add value to the GDP of most countries, so from a nationalistic point of view it’s really important to get them over the capital raising barrier sooner rather than later. While the larger publicly traded companies are visually seen as adding real value to the economy it’s the thousands of smaller businesses that are the engine room driving future growth and as such need to be nurtured and encouraged to plan and manage their growth scenario's which in most cases will require a capital injection probably from a corner stone shareholder.
The question this raises is: how do we as business communities educate these companies in the disciplines associated with capital raising in order that they can move forward with a reliable capital structure and solid shareholder base in order grow their businesses with confidence? In my latest book Corporate Musings I’ve devoted a complete chapter entitled “Preparing a Company for a Capital Injection Associated with a Growth scenario” but it takes more than the written word to convert thought into action. It takes a change in attitude by the company directors or founding fathers to accept that they need to sell themselves to the investing community exactly in the same manner they sell their products into the market with a focus on adding value and bringing the best and most professional proposition to the table.
While the larger publicly traded companies are visually seen as adding real value to the economy it’s the thousands of smaller businesses that are the engine room driving future growth and as such need to be nurtured and encouraged to plan and manage their growth scenario's which in most cases will require a capital injection probably from a corner stone shareholder.