SIXTEEN TIPS TO A SUCCESSFUL CAPITAL RAISING!
By Paul Niederer
The better job you do with these 16 steps the better your capital raising will be.
Write a good story,
get a good board,
value realistically,
secure your assets,
prove the concept,
get good numbers,
choose a clear exit,
question your scalability,
make an investors list,
get a decent writer,
create an elevator pitch,
get good promotional materials,
build scarcity and anticipation,
present you pitch well,
keep communicating with investors, and
maintain the momentum.
Each tip is discussed below.
How to make your capital raising a high quality one! (Quality)
1) Write a good story. You need to create a good story. Every week I see application after application and the ones that jump out have a good story. Present the fundamental business or idea in a compelling story. As someone said long ago He who has the best story, wins!
2) Locate a good board. Gather an experienced Board of Directors. Investors want to know who is going to be responsible for the money they are investing.
3) Work hard on getting a realistic valuation. Get advice on this. Of course, your company is worth millions, but if you want to attract serious investors, price it to get investors.
4) Secure your assets for investors. Things like patents and IP need to be secure for the investors to commit.
5) Prove the concept. Ideas are great but a proven concept is worth more. OK, maybe it takes longer but the payoff is bigger.
6) Get realistic numbers. Work hard with your accountant to get good realistic numbers you can defend. Accountants will extrapolate the future on whatever you give them but you must brief them that you want them to challenge you on every figure. Even as a Start-Up, you can get useful figures. Clearly state the assumptions behind the figures.
7) Choose a clear exit. Investors want to see that there is an event in the future where they will gain a substantial reward. Maybe you build your business to sell to a strategic buyer. Perhaps it is a listing on a stock exchange. Again, speak to your accountant and gain clarity around this event.
8) Question your scalability. Is your business saleable once you get funds? Double check the premise that makes you believe your business is saleable. Could it be done without you?
How to market your capital raising! (Execution)
9) Build an investor list. Take out a blank piece of paper and start writing down names of people who you know think you are doing a great job with your business. You will be surprised how many of them have had the thought; Wow! I would not mind owning a business like that! Do not stop at families and friends. Look wider. Note down prominent towns folk, suppliers, customers, professionals and anyone else one degree or two degrees out from you in your own circle of influence.
10) Find a good writer. The story and the offer need to be articulated in a way that makes it compelling.
11) Get an elevator pitch. An elevator pitch is a concise, carefully planned, and well-practiced description about why people should invest. Your mother should be able to understand it in the time it would take to ride up an elevator.
12) Get good collaterals. Considerable time needs to go in to getting good selling tools. We have found that offers on our website that include videos are 62% more successful in raising funds.
13) Build anticipation. Every big movie or music release does this brilliantly. Long before your offer appears in capital raising publications and your offer document is live you need to hold events, investor meetings, discussions with the prospective investors. Find a capital-raising platform like ASSOB, which has in-built anticipation tools.
14) Practice your presentation skills. Whoever is going to present the opportunity at investor meetings needs to practice until perfect.
15) Keep communicating. Throughout the Capital Raising process people will keep putting up their hands and say Im interested. Make sure you keep them interested. Communicate when you get new investors, win awards, gain a new big customer etc.
16) Keep the momentum going? You probably have a business to run as well but you need to keep the momentum going. This is done by regular communication with your prospective investor list.
By Paul Niederer, CEO of the Australian Small Scale Offerings Board, an organisation that has assisted SMEs or small to medium businesses to raise over $100 million in the last few years.
Corporate Outcomes Group is an accredited sponsor of the Australian Small Scale Offerings Board (ASSOB) and applies the foregoing guidelines in its capital raising assignments for clients.
10 March, 2010 - Evidence based planning and management: taking the guesswork out of decisions.
By Roger Levy
Director, Corporate Outcomes Group Ltd
For full pdf of reserach paper including diagrams please download via the link at the bottom.
SYNOPSIS
In times when competition is fierce and the market place is rapidly changing, the most important tool a person has is the capability to obtain relevant data and take it through the path of; data to information transformation; information to knowledge and understanding and then; knowing how to use this knowledge and understanding, convert it to wealth. The process has the benefit of empowering the individual or organisation.
INTRODUCTION
Knowledge has become the most important factor in economic life. It is the chief ingredient of what we buy and sell, the raw material with which we work. Intellectual capital not natural resources, machinery or even financial capital has become the one indispensable asset of corporations (1)
Michael Porter, Professor, Harvard Business School stated data, not lateral thinking, gives him the edge in his work on strategy and competition. (2)
Data, in itself, is of limited use. It needs to be transformed into information and that information utilised to develop knowledge. Knowledge and understanding are partners allowing for extraction of opportunities for action and the analysis of their effects. Having such ability to make decisions and revise them as needed to achieve a desired outcome is the basis of having power, whether it be economic, political, social or personal. From power comes wealth and again, this may be economic or personal.
TYPES OF KNOWLEDGE
Stated in the ARUP Journal (3): When managing knowledge, a distinction is commonly drawn between knowledge that is tacit (associated with skills and experience in peoples heads) and that which is explicit (in documents and databases). Both must be managed if organizations are to be successful, but the emphasis will vary according to the business focus.
Explicit knowledge to support standardization needs to be captured, articulated, documented, and stored in electronic databases for reuse at a later date. Tacit knowledge, by contrast, is highly personal; it is the skills and expertise acquired through experience. And is thus strongly linked to the context in which the knowledge exists. It is difficult, if not impossible to capture and reuse tacit knowledge, but using it effectively is nevertheless essential for companies seeking to maintain a competitive edge. (3)
I contend that the relationship between tacit and explicit knowledge is not as easily defined with transitions from one to the other constantly occurring, and hence mining all data for knowledge must allow for both concepts.
ECONOMIC WEALTH
Economic wealth is the goal of most enterprises in a competitive environment and can be via profit maximization or operational cost reduction; an example being a not-for-profit benevolent organization leading to greater services provided for the same budget.
Personal power arises from greater self-understanding leading to increased effectiveness in business, social activities (sport, inter-personal relationships), and self. The latter being a subject of discussion and search for thousands of years.
This paper concentrates on the business and social enterprise processes of getting wealth from data.
INFORMATION
The process for wealth generation is defined as the path through data to information, to knowledge and understanding, to power thence to wealth.
In Business Intelligence systems there is often confusion over the differentiation between data and information.
We have all experienced management reports, which exhibit the characteristics of:
Giving historical data lag indicators.
Giving this data when it is no longer of relevance to current operations.
Is bulky and difficult to quickly get to the hub of an issue.
Does not assist in the decision making process that is the daily function of a line manager.
In short, the reports are only useful for indicating what happened and do not address the now or future of the enterprise.
Business Intelligence Systems must provide information which satisfies the following parameters:
Be timely.
Be relevant.
Show what is happening now (or as close to real time as possible as most data gathering systems, i.e. databases, operate on some form of a batch process).
Present the data in an easily understood format.
Allow for drill-down from high-level data to causal factors root cause analysis.
Show what will happen if there are no management changes predictive reporting.
Allow for simulation of what if scenarios predictive analysis.
Hence allowing for managers to have control of the situation, be pro-active rather than re-active and make decisions based on fact rather than gut feel.
The measures should exhibit the factors:
Many and varied but must be timely, usable, accurate.
Show the whole health of the business area under consideration.
Financial figures alone are of limited use as they are lag indicators and, often, due to delays in production, of limited relevance to what is happening now.
Hence the need is to cover:
Finance
Internal strategy and planning
Customer perceptions and needs
Employee personal & business needs, effectiveness and development.
These 4 elements are the building blocks of the Kaplan-Norton Balanced Scorecard, a very useful method of presenting data and tying it to KPIs. (4)
Hence, I define information as: data which empowers the management of an enterprise or activity which is presented in a timely, accurate and usable format.
One project undertaken by the author and others within a very large organisation was a review of the performance of customer complaint handling leading to the trial and implementation of new, national procedures, based around the concepts of information gathering, dissemination, analysis and use.
The results:
Customer satisfaction up (measured by follow-on surveys)
Complaint handling time reduced
Less cost in handling complaints
Process under control
Greater knowledge of the true number of complaints hence plans could be made to address root cause issues.
The success was due to:
Identification of process problems. Stabilisation of the process was demonstrated by analysis of variations techniques whereby it was shown that the previous process was unstable and the new one, with significantly reduced variation of the measures, reached stability.
Implementation of accurate & timely information systems. National performance information was provided on a weekly basis and any region worse than the national average received daily reports.
Being able to get that information to the correct person in time for real changes to be made and measured.
A significant outcome was the demonstration that sustainable management change can be achieved by the timely provision of usable information.
It has often been observed that we may send managers for off site training, MBAs, team building, motivation, etc but when they return to their previous environment, much or all of the benefits are not implementable or lost. Information supply changes that paradigm.
Information Dissemination & Presentation:
Traditional dissemination techniques extend from verbal what on earth is going on? to written reports which often contain many spreadsheets, tables and graphs. They generally meet none of the criteria for efficiency and use.
Today we are rapidly moving through a revolution in reporting systems utilising:
inter-linked and hierarchical information,
dissemination via the use of web-pages (usually the corporate intra-net),
down-loading of data cubes which, with the appropriate analysis tools, allow for the local manager to do his own causal and predictive analysis.
Presentation techniques have moved from the posted spread sheet to advanced analysis and modelling tools including geo-spatial analysis, data visualisation, and the rapidly developing area of decision rooms and virtual reality centres which may include visual (3D), aural (multi-dimensional sound), haptic (physical feed-back such as pressure on a body that is manipulating data in a VR environment) and time factors.
The human mind is most efficient when presented with information which is in a format most closely associated with the thinking processes.
Data visualisation is an example of this whereby the mind, observing patterns and trends, can deduce facts very efficiently. It is like removing the pre-processor between a spreadsheet, for example, and the actual processor of the mind. This is the basis of cognitive processing systems enabling the other processes of thought: reasoning and deduction, to be similarly enhanced.
Data visualisation, combined with predictive and causal information systems in a virtual reality environment is an exciting development with much promise.
Tools & Techniques:
There is no single methodology, tool or technique which satisfies the general needs of an enterprise in Business Intelligence generation whether this be in the areas of analysis, reporting, prediction, operational management or forensic investigations.
The key ingredients of a successful system are:
availability of data pertaining to the areas of current and possible future interest. This assumes that the data:
is gathered in the first place
is stored in a form which is readable
has known parameters (meta-data, known representation of a set if not the complete set)
is clean (not a common factor, unfortunately, especially for aged data).
data extraction tools exist with known business rules (also called filters).
analysis capabilities exist the most potent combination is human (combination of experience & technical expertise), powerful processing systems and appropriate software.
quality assurance review systems are in place and functioning at all times.
There exists a provable audit trail from conclusions back to the raw data; this is essential in forensic analysis (in a court, the absence of such proof would often render a submission unacceptable) and BI systems as without this reliable root cause analysis is not possible.
legal & regulatory requirements are known and strictly adhered to. (privacy laws, libel/slander potential, proprietary data protection, protection of competitive information, etc.). These aspects are a critical component of any risk analysis in data mining and BI system devolvement.
Figure 1 is a VisualMind analysis of the identified issues in data analysis and Figure 2 is an outline of one process for complete data to wealth transformation giving many of the outputs that occur through the process.
CONCLUSIONS:
The old adage that Knowledge is Power has never been more true than today and the source of knowledge is information.
Information that by its nature of relevance, timeliness, accuracy and presentation is truly useful for planning, managing and problem solving.
Evolving computer based systems of data characterisation, analysis and presentation present the manager with a range of very useful tools.
Couple these tools with evolving tools & techniques in information dissemination and presentation then we have a revolution in management effectiveness available.
Whether or not an enterprise grasps these may determine its future survival.
ABOUT THE AUTHOR
Roger Levy has more than 30 years experience covering market and strategic planning, sales management, consultancy, forensic investigations, manufacturing, business development, human resources development, engineering, project and general management. He is Managing Director of Forensic Technology Pty Ltd, a consultancy enterprise utilising the latest tools in data, text and information mining to assist their clients in achieving their goals.
References
(1) Intellectual Capital, The New Wealth of Organisations; Thomas A. Stewart, Nicholas Brealey Publishing
(2) Australian Financial Review, Boss Magazine, Sept 9, 2002, pp34
(3) Making Knowledge Work, Dominique Poole Tony Sheehan, The ARUP Journal 2/2005
(4) The Balanced Scorecard, Robert S Kaplan & David P Norton, Harvard Business School Press, 1996.
22 February 2010: Investor Relations and PR Tips for Small Cap Companies
By David Perry
If you are going to achieve traction with investors, brokers and the media, you need to understand their language. Below are a few valuable tips which apply not only to listed companies, but also smaller entities seeking to raise capital.
Each one is a detailed story on its own that needs to be considered carefully.|
Strategy: Has to be clear, simple and well articulated.
Track record: A well documented and proven track record will make it easier on your journey towards success and should be part of your reasoning behind your strategy. Management: The MD and CFO are the most important representatives of your organisation. If no profits have been made thus far, focus on your management and milestones. Investors will rate management on the likelihood of achieving the projections. Numbers: Investment and valuation revolves around numbers. Therefore it is very important that you have someone who can talk cogently about the figures, typically the CFO. Patience: Its a distance race, not a sprint. Take a longer-term view of your relationships with brokers, investors and the media. Communications: Should be integrated, consistent and targeted. Communication and engagement is important with all audiences - customers, staff, investors and the media and can be targeted, but should be consistent. Engagement: Relationships are about two-way communications and engagement. Build two-way relationships, credibility and trust. Face-to-face communication is an important part of the process of building engagement. Key messages: Hone them into shape and use to underlie all your communications. Q&A: Compile a Q&A response form to support your key messages, so that everyone knows the story and can focus when asked questions. Repetition: At every opportunity when you are in front of investors, brokers and/or the media, reiterate your key messages, your achievements and milestones. Balanced messages: Focus on and market your successes, but also talk about your challenges and what you are doing to address them, i.e. the risk envisaged in the process. |
Media relations: This is part of the story, not the end game. Brokers, investors and customers monitor the media every day. A media program is important but the focus needs to be on content, not just getting your name in the paper. This can be counter productive. Accessibility: The MD & CFO must be available to interested parties both over the phone and for meetings. Back up plan: Have a plan in place to handle bad news and get on the front foot. Dont hide, lie or bluff. When management credibility is called into question because of the way you fail to communicate, you are savaged twice and this may become a noose around your neck. Regular communications: Communicate regularly covering the half-yearly results, achieved key milestones, or when you have something to say, focusing on quality and not quantity. Under-promise and over-deliver: Delivering on forecasts is one of the most important things as a company. Do not publish a forecast unless you are confident of meeting it. If in doubt, add some guidance around the key drivers of the business. Traction: Expect 2-3 visits with a broker or investor before you can really engage them and can assure them you are doing what you say you will do. This typically takes more than 3 months. Research: Aim to increase coverage and target brokers who cover small caps and peers. Broker research is preferable. This is part of dealing with capital raisings. Otherwise, utilise FactNotes and/or paid research to get the process going. Online communications: Understand and realise the power of the internet, your website and use your database to improve your direct communications and reach e.g. webcasts, email lists, e-newsletters etc. |
If you need help with translation and/or implementation, contact us to assist and make a difference!
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