Raise Equity Capital
Raising equity capital is a difficult task to consider if you are thinking of doing it. This is because there are lots of issues and concerns to address.
However, there are many ways that can guide you on how to raise equity capital.
Primarily, it does not necessarily mean consulting a business attorney if you are thinking about sorting out things. However, you should keep on mind that you need to tackle numerous laws when dealing with raising equity capital. That is why it can also help if there is someone who can guide you to ensure that everything will be alright. This makes sense when hiring business attorney as he can help you in preparing the documents needed in raising equity capital.
Concerns when Raising Equity Capital
Preparing the business for equity raising
Obviously, most business aiming to develop would like to raise the equity capital. In this sense, it is important to keep in mind to keep everything right on the first time. As much as possible you should pay attention on two key objectives. The first objective to consider is to maximize the chances of raising equity successfully. The other one is to optimize the value in case you buy new equity. That is why it is necessary to prepare your business for the process of equity raising known as business “grooming”. Doing this process you can identify and tone down the potential risk.
Key factors in raising equity
If you are dealing with equity investors you should ensure to have quality management team that carry proven track record. Likewise, your company should be attractive to investors. You should present a well researched and sound business plan. Apply strategy that can help you in delivering value growth for your company.
Sources of equity
The sources of equity capital depend on the amount of capital you want to raise as well as the development of your business. Some of the options where you can find sources for raising equity capital include friends and family, habitual investors, investment fund, private equity investors and stock exchange.
The cost of equity
Equity is the most expensive form of raising capital for your business. Usually, the cost of equity ranges from 15 to 35 percent. Likewise, the returns of the company also play an important role in determining the cost of equity.
Aside from that if you are thinking to raise equity capital you should look for equity investors. The equity investors want to ensure that they can realize the investment put in the business the soonest possible time. In this sense, make sure that you can convince equity investors that your business is promising so that they would place investment in your business. Likewise, you can also be involved in raising equity capital although the process is very stressful.