Len McDowall

Even in the current market turmoil, there is still a lack of great deals, not a shortage of capital.

The public markets have all but evaporated for the moment, however the “private equity” sector is still in the market with, collectively, billions of dollars to invest. All you need is a great deal!

However these private investors are not looking for great ideas. They are looking for substantial businesses with great future growth prospects.

Getting a private equity investor to invest in your business means more than the money. Its confirmation that you have a sound, sustainable business model.

Your sustainable business model should include an experienced management team with a sound understanding of the industry they are in, together with a realistic plan which includes achievable financial forecasts.

You must be able to demonstrate great growth potentail and show that you have a comprehensive understanding of the customer.

Approaching investors unprepared is probably the single most common reason why entreprenuers fail to attract capital. If your proposal does not include all of the above, chances are you won’t get past first base.

However, once you learn how to make your business “investor ready” and you succeed in attracting an investor the first time, going for subsequent rounds of funding, or funding a new venture becomes much easier.

Len McDowall

The current financial situation has caused a backlog of businesses seeking capital.

These businesses which would normally attract investors say within a six (6) month timeframe are now finding that investors are not there.

These investors have all been hurt by the stock market retreat, they are experiencing large paper losses and have their hands in their pockets and their cheque books firmly locked in their desk draws.

Current response rates from these investors are down by 90%.

Transactions that have features such as being established, having good cash flows, good management and perhaps are seeking expansion capital or seeking funding for a management buyout always have the opportunity to find investors, particularly if they are of a larger size.

What then will happen to those who are in the earlier category of being a start-up or early stage business seeking capital?

In my opinion they will have to wait longer, try much harder to find that elusive investor and most probably have to give that investor a much better deal then they would have last year.

What is for certain, is that, that group of businesses will create a large backlog of capital seekers.

Len McDowall