The science of successful fundraising

Source: Technology Digital

Date :20/06/2007 14:42:14

Most science and technology businesses require outside investment at some point in their development. Julian Hickman looks at the fundraising options for these companies

A great deal of research and development must take place before a technology-based product or service can be brought to market so these companies take some time to turn a profit. Whether you are a new business needing a cash injection to get started, or an established company looking to develop a new product or break into new markets, fundraising will be vital to your success.

Raising capital is never easy and it can be hard to persuade investors to put their trust in your business. This is especially true for companies who develop technology for the healthcare sector as product development can be a particularly lengthy process. The key lies in understanding what investors are looking for so that you can make your business more attractive to the people who will help you drive it forward.

The challenge

Small companies developing new technology can be appealing to investors if presented in the right way. You need to analyse your company from the point of view of potential investors to understand the challenges you face in raising finance. Think about all the questions that investors will be interested in and seek the answers. What is the perceived risk of investing in your sector? And can you define the specific factors that determine your company’s level of risk as an investment? What are the potential returns for investors and how and when will they materialise? What barriers will you have to overcome to succeed? This involves doing some very detailed research into your market, your competitors and gaining an understanding of how your industry is likely to develop over the next ten years.

Once you have identified and confirmed all relevant information you can develop a solid business plan which will give your enterprise focus as well as attracting the most valuable investors.

Proving your strength

For any company working in the science and technology sector it is essential not only to have a robust business plan, but also to show investors that you have the resources and skills needed to follow your plan through to fulfilment.

As a specialist investor in unquoted companies my company looks for three key attributes; a unique innovation which fulfils a market need, a dynamic commercial team and sound financial management. These are the three sides of the investment triangle. If you can prove your business is strong in all these areas you will undoubtedly impress investors.