Fundraising is a financing technique that involves the entry of investors into a company’s share capital, is essential for a variety of purposes, such as financing working capital requirements (WCR), accelerating development, launching an activity, acquiring brand awareness, and gaining access to a network and advice.
Raising capital is critical to a company’s growth and sustainability, as it provides unique chances to widen its horizons and reinforce its market position.
In this context, information systems, particularly ERPs, are strategic tools for attracting investors. These tools can be used to optimize a company’s internal operations, making it more financially appealing to investment funds.
So, what are the criteria for choosing a fundraiser? How may an ERP serve as a strategic tool for investors?
How to Succeed in Raising Funds: What Are the Main Criteria for Investors?
When planning a fundraising campaign, several criteria are examined. These criteria are critical analytical factors for appraising a project. Among these we find:
Assessing value creation potential and growth potential
When evaluating an opportunity from the investor perspective, their intention is based on the search for high growth potential. The investor seeks one or two of these situations: a company in full expansion also known as a venture capital, or an already profitable company, thus seeking a development capital.
Product and market evaluation
Several factors need to be considered to give investors a clear picture of the product or market under consideration. These include an analysis of the estimated size of the market, to understand its potential and scope. An assessment of the market’s growth potential, which offers insights into the company’s future expansion. In addition, seasonal variations in activity need to be carefully examined, as they can have a significant impact on the company’s financial performance.
Competitive dynamics
When evaluating a company, it is essential to examine the nature and intensity of competitors, as well as the strength of suppliers and distributors. It is also important to assess the company’s ability to deter potential new competitors. All these factors enable investors to assess the company’s resilience in a constantly changing environment.
Management team capability
This approach encompasses the leadership and experience of the executive as well as their managerial team. Organizational and administrative skills, combined with marketing, sales and production capabilities, play a central role in a company’s success in fundraising. A competent team can not only develop effective strategies, but also implement operational plans. This can ensure the company’s long-term survival in the marketplace, and thus the acquisition of investors.
Financial projection
Financial projection includes the expected the estimated timeframe to reach the break-even point, a key indicator of long-term financial viability. The financial projection enables investors to understand the project’s prospects for growth and profitability, which is fundamental to making informed investment decisions.
Funding and financial stability of the company
This criterion carefully examines the link between the proposed opportunity and the objectives for which the funds are required. Venture capital firms must also be vigilant about their existing investment portfolio, as well as commitments made to their investors. This in-depth understanding of the company’s financial situation and its relationships with investors enables stakeholders to make informed decisions, thus guaranteeing the long-term growth of the investment.
Terms of the investment operation
When evaluating an investment operation, it is essential to consider the specific terms and conditions of the proposed investment. This includes the precise nature of the investment, as well as the level of development achieved by the target company. The possibility of bringing several investors into the deal, and of investing in several stages, particularly at later stages of the company’s growth, is also a crucial aspect to consider.
All these factors contribute to a company’s ability to increase its capacity to invest in working capital. They all need to be considered in preparation for fundraising. IT tools such as ERPs can help structure all these elements.
ERP as a major asset for investors
The business world is often dynamic, with multiple sources contributing to its growth, notably through the implementation of a suitable ERP system. In the context of fundraising, management tools play a crucial role. The information system is the key to the company’s digital transformation, ensuring healthy growth. This system can also help to better identify working capital requirements.
Although the acquisition of a management software solution requires a substantial investment, ERPs enable the organization to be structured in terms of business processes. It also allows for a better understanding of data, for more guided management and decision-making. Integrating an ERP system into your organization is therefore crucial to guaranteeing operational efficiency that will help your business grow.
The priority for an investment fund or individual investors is based on the development, management and financial visibility of its holdings, with the aim of supporting and increasing the company’s value. The objective is to generate added value for all parties involved, including the investment fund, management and employees.
By supporting companies in optimizing their management tools and structuring their financial services, private-equity investors can anticipate and grasp business trends proactively, thanks to ERP support.
It is therefore essential to choose a flexible information system, capable of keeping pace with the company’s growth. Integrating an adaptable ERP guarantees greater durability and reliability.
Fundraising is of great importance to stimulate growth, increasing capital and strengthening a company’s cash flow. In this context, ERP is a strategic tool for facilitating this process. It is imperative to put in place a high-performance information system that assists companies in their structuring process to raise funds.
To that end, we have supported several companies in the integration of an ERP system to facilitate their fundraising. This approach has enabled us to develop in-depth expertise in this field, strengthening our ability to guide companies through several crucial stages of their growth.
