“Investor Ready” is not enough

“Investor Ready” is not enough

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While numerous enabling programs exist, offering services in business planning, technical development, market analysis, financial forecasting, etc., few enabler managers or entrepreneurs have been through the fundraising process.  As such, most “Investor Ready” programs fail to prepare entrepreneurs for the actual capital raising process.

Entrepreneurs are left facing various challenges, including:

  • Inability to identify an appropriate source of capital
  • Lack of understanding of common investment instruments
  • No understudying of, or preparation for, the investment process. What happens after a pitch?
  • Misalignment of priorities between the investor and entrepreneur
  • Limited knowledge on due diligence requirements
  • Misalignment of structure and valuation
  • No focus on the exit event for investors

The lack of preparation and ability to effectively engage investors contributes to a perception of poor quality “deal flow”, which is a hindrance to attracting individuals to become Angel investors, or to consider investing in certain locations.

Additional training is needed to help prepare companies not just to be able to pitch to investors, but to prepare them for the investment process – screening, due diligence, valuation, deal structuring, the content and impact of the legals, and critically, the post investment relationship with the investors. Such sessions should also help to break down the barriers resulting from lack of trust some founders have in potential investors, a lake of trust significantly resulting from a lack of understanding of the process.