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Home > Financing > Types of Financing > Tips

Regardless of which equity source you might pursue, these practical tips may prove extremely helpful.

1. The road to achieving satisfactory equity financing can not only be long, but personally demanding. First, it is not unusual for a deal to take 3-9 months, at a minimum, to complete all stages (packaging, solicitations/marketing, interest, due diligence, negotiations, commitment). Do not wait until you absolutely have to have the money before you start the process. Investors do not like to be rushed. The greater the perceived immediacy in the deal, the less likely the investor will positively respond.
2. Be prepared for extensive questioning and due diligence. Sophisticated equity resources will have questions about the competency and depth of the management team, the investment's ability to pay off at compounded rates of return of 25 percent to 50 percent, the size of the market and the firm's distinctive competence to grow significantly in that market, any proprietary product or significant barriers to entry for competitors, the amount of money needed, and the depth and competency of the management team.
3. Asset-based lenders are usually accessed in the Hampton Roads area through loan brokers. A number of asset-based lenders are actually subsidiaries or departments of banking institutions. There is a national organization, the Commercial Finance Association, (212) 594-3490, that can provide a history of the industry, a roster of its members, and other relevant data.