Capital Raising: The Future 10 Trends

Are there any major changes to the Capital Raising industry? Should you be using the traditional ways, or should you be forgetting about the old ways and adopt the new ways when comes to capital raising?

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No.1: Strong Business Is Always a Strong Business - The old rules will never change, strong businesses will continue to attract new capital no matter where and what industries you are in.

No.2: The power of Internet and Online media will play a pivotal role for any company seeking to raise capital, in the past; this was more associated with high growth companies such as those in the IT and Telecommunications sectors, but this will be expanded into other sectors.

For instance, many financial institutions and REITs are already using Internet as part of their capital raising strategy.

No.3: No passive marketing or investor relations. The more marketing activities you engage in, the better the possibility.

No.4: Social Media as Investor Relations Tool We believe, Social Media will play very significant role in the capital raising industry in the future, both from marketing, networking and the way deals are structured.

No.5: Competition in deal flows: One interesting aspect because of the power of Internet is that you can approach investors anywhere in the world.

From capital seekers’ point of view, this is a double-edged sword, as you could now see competitors from other nations also contacting the same VCs with their ideas, and vice versa.

No.6: He who owns the database rules. As I have mentioned earlier and also concurred by the VC Managers. If you own a database of clients, prospective investors, prospective shareholders, then you will be in a much better position to raise capital.

No.7: Welcome to Global Village. Thanks to the rising emerging markets, capital seekers now have a much wider choice in terms of capital investments; you can now tap into the fast growing venture capital markets in Asia as well as other emerging economies.

No.8: Rising Middle Class Individual Investors from Emerging Economies – In many instances, it is much easier to raise capital from individual investors instead of institutions. With the fast rising middle class in emerging economies such as the BRIC Economies, you should also consider them as a possible capital raising source.

No.9: Do you really need to raise capital? Again, always ask yourself question, what is the purpose in raising a capital? If you are raising capital for expansion, you will have a much better chance. Remember, nobody wants to invest into a business that needs to be fixed; there are plenty of better opportunities out there.

No.10: Contingent Plan: Ask yourself this question, if you cannot raise the capital, what are you going to do about it? Always remember this, less than 1% of businesses can raise capital from Venture Capital or Private Equity Firms.

Always have a contingent plan to your business – if you have an existing business looking for growth, have other funding plans such as talking to the banks or other industry players. Some have also gone down the path of franchising for instance.

If you are a start-up and have an innovation, investigate if you can apply for grants as they do not take up strategic shareholding in your company.

If you are in need for cash to survive, the very first thing to do is to cut down your cost and not simply relying on raising capital to provide a lifeline.