Early Stage Project Financing

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Dec 24, 2012

Early Stage Company Financing
Try not. Do or do not. (No try, just do or do not)... Yoda (jedi master) If one is of the opinion that money will do everything, then that one may well be suspected of doing everything for money. But then money is just about everything and even more so if it is early stage company financing for start up companies. What happens then if money/ or financing becomes the overarching focus? For starters this is usually not healthy as it dilutes focus. Diffusion builds ambiguity - it distracts the entrepreneur from the key strategic and tactical issues needed to put the business on the execution road map. However when one runs out of money - it is indeed game over. How then can young/ first time entrepreneurs get on top of such situations and walk the thin rope - and stay focussed on the larger objectives of developing the business. Here are some workarounds that may be handy to early stage entrepreneurs and companies from the financing context: 1.Assess accurately ‘how much financing’ is required. A common problem observed is most new companies typically underestimate their finance requirements and cash flow needs, which often results in aborting projects mid way

2.Don’t hesitate to get the ‘right professional’ help. Carving out the right financial model, biz plan and financials is crucial to demonstrate the right business logic. Many new start ups falter on this aspect and as a result don’t even get into the consideration of professional angels or VCs, specifically when it involves projecting financials and valuations

3.Seek an outside and ‘professional perspective’. Financials and company valuations are complicated factors with critical ramifications. Take too much money now at a low valuation and you sacrifice a significant percentage of equity ownership of your company. And if you take too little, you risk running out of money. Apropos, it is crucial to balance short- and long-term cash needs with...
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