VC: 3 Reasons Why They Say No

Seven in ten (70%) businesses that have attempted to raise capital have failed at least once, according to the independent investment service firm, Smith & Williamson.

Why?

The reasons behind this are varied.

1. Week Management Teams

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Half of respondents (45%) among 501 scale-up companies and more than 500 non-scale-up SMEs in 2018 said that their management team wasn’t strong enough.

2. Fragile Business Models

One in three (27%) said their business model wasn’t good enough.

3. Bad Finances

One in five (22%) admitted to not having a good enough handle on their finances.

What the expert says

John Morris, Partner at Smith & Williamson, said: “Securing investment into a business shouldn’t be a blind leap of faith. Preparation is key. To be investor-ready, businesses must ask themselves difficult questions and demonstrate they have a strong management team in place, something that is crucial for investors. Equally important is the level of ambition displayed and a degree of certainty on future plans and objectives.

“Even with these measures in place, securing investment is never easy. Getting high-quality and relevant advice right from the outset can significantly improve the chances of businesses securing funding. This mind-set will see the number of firms successfully raise external finance increase and, importantly, reduce the number of those experiencing funding regret.”

Find out more here.

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