Short description: It takes money to make money! There are costs to be covered by entrepreneurs looking for large amounts of $$$. Be prepared for what is a fair cost and what is not …
“It takes money to make money” is very relevant when it comes to raising millions of $$$ for a new business. There are very real costs involved in creating that winning business you have in mind. You will soon discover that the costs of hiring professionals to work on your new project require a lot of money, unless they are shareholders … You also have the long list of licenses, permits and approvals that you will normally need to purchase. You may feel like you are paying a lot of money. But that’s part of the cost of securing your financial future – these things are necessary and cost money.
It is also true that when it comes to raising money from investors, you have the costs of making your business have a high-quality business plan, cash flow forecasts, and some basic business models to show that you are solid and ‘ bulletproof ‘in changing conditions. . There are also some financing consultants who can guide you through the application process with an investor. If they are experienced and capable, they should know what the investor needs to feel safe investing in you and your project.
Without a good business plan, you will not meet the investor face to face to present your proposal. Many future business developers find that approaching an investment source also costs money. A broker should only charge for success – a commission on settling his funding.
Be careful and check everything. Since the global financial crisis, a large amount of capital has been destroyed, severely limiting the ability of banks and other financial institutions to finance investments. Be as wary of ‘famous names’ as you have never heard of … The company you approach may have been an active investor in the past, but check how much they are currently investing …
However, an investor may also want to be paid for submitting an application. This is valid, because they need to know who you are and if you are “credible”.
Investor due diligence costs you money, and it can be quite a bit of money. If the investor does not live in your country, you will want your people to travel for on-site inspections, face-to-face interviews with everyone associated with the project. They have to. It is unavoidable. If you’ve been working with nice people, who can deliver, then they’ll need to work 12-16 hours a day on due diligence and avoid parties and girls. The other guy you don’t want to get involved with …
The overall budget for the application process will be approximately 0.5% of what you are looking for. So if you are requesting $ 50,000,000, that would entail costs of roughly $ 250,000 in the entire process, application, and investor due diligence.
