While the markets, as measured by the S&P 500, are approaching highs not seen since 2007, the IPO market and other means used by private companies to raise cash from new investors have slowed to a pace similar to that of 2008 as the recession was going into full swing. Part of the blame can be laid at the feet of Facebook's problematic IPO in May of 2012 while another concern that dampened enthusiasm for IPO's in the second half of 2012 was the looming "Fiscal Cliff" battle, which had many industry watchers predicting a slide back into a recession due to spending cuts and tax increases.
Another factor, especially for private placements and reverse mergers, is the preference of investors for investments that have liquidity and can be sold into an active market. For many, the idea of owning restricted shares or shares that are months or years away from a liquidity event is simply not the most attractive use of their investment dollars.
These concerns aside, money is still being allocated these types of projects when the investment presents an attainable and realistically large opportunity. Here are the keys to presenting the type of investment that will attract attention and funding in this environment:
*Be ready to present the path your company will take on its way to reaching its objectives in detail – Being able to clearly describe how your business will get from where it is now to the point where it rewards its investors can help investors understand the workings of your business as well as the role their investment will play.
*Be able to show proof that your product/service is viable and has a market with enough size to drive the revenues that you're forecasting – A proven product/service with a market looking for the solution your company provides takes a significant amount of risk out of the equation.
*Execute, execute, execute – Companies that take an aggressive stance toward executing their business plan can often succeed even when their product isn't the best on the market. Being perceived as a "doer" versus being a talker is where you want to be in the minds of your investors.
Private companies seeking funding are always operating in a challenging environment and current circumstances are making that job even tougher. Working with a team experienced in helping companies get funded, such as Dmitrij Harder's team at the Solvo Group, can get you prepared for outside investors and put your company in the best position possible for raising capital. For more information, visit: http://solvogroupinc.com/