Len McDowall - Is there a backlog of businesses seeking capital?
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.