Wednesday, August 19th, 2009
Entrepreneurs looking to raise capital for their venture need to position their companies for the market upswing, and they need to be aware that investors in this climate are looking for great value.

So what are the top 10 tips that entrepreneurs should consider when raising equity capital in Australia?

1) Write a good business plan - with realistic financial projections.

2) Establish a Public Limited Company - it is illegal for Pty Ltd companies to offer shares to the general public without a prospectus. Equity capital raisings are governed by specific sections of the Corporation’s Act that need to be strictly complied with.

3) Appoint a minimum of 3 knowledgeable, well-networked and experienced board of directors. People invest in teams and the better networked your directors are, the greater your chances of building confidence and momentum in the investment offer.

4) Explore all avenues of capital-raising - VC and Angel Investors are not the only way to raise capital in Australia. Believing that all you need is one large investor is a fallacy, when many smaller ones will often achieve the same outcome. If managed properly, it can be easier to sell 20 x $50K parcels than finding and converting one investor for $1M!

5) Create an investor-friendly environment. Use facilities such as trust accounts, cooling off periods, minimum subscription amounts, professionally prepared offer documents and share certificates, all of which give investors confidence.

6) Structure the offer correctly to make it attractive to early and later-stage investors. Don’t get greedy, but at the same time don’t give away too much equity in your business.

7) Articulate your offer to investors correctly. They want to see the potential for the investment. They may be interested in the product/service or technology, but are more interested in what realistic returns they might see in the future.

8) Set clear milestones for your business over the next 3 years and provide an exit strategy. Investors want to be able to track and access your progress towards an exit strategy in the foreseeable future.

9) Create and practice a professional pitch presentation. This will be an essential tool in presenting and selling your opportunity to potential investors. Remember – what’s in it for the investor?

10) Correctly market the offer and ensure that you are compliant with ASIC’s rules and regulations. Most entrepreneurs don’t realise the legal minefield and potential issues associated with capital raising. Get it wrong and you could receive a $20,000 fine, 5 years jail and eventually have the company wound up and all of your hard work wasted.

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Alchemy Innovation Development

Dan Liszka is Managing Director of Alchemy Innovation Development

Alchemy is holding a Stepping Up program – Becoming Investor Ready – Preparation for an Equity Capital Raising in association with the NSW Department of State and Regional Development. '

For more information or to apply, see
Kate Ingham
P: 02 8233 6170

Brianna Power

P: 0403904912


What are the top 10 tips that entrepreneurs should consider when raising equity capital in Australia?


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