Recent press reports would suggest that our gazelles are finding it harder than other European Countries to raise cash. More than a fifth of companies (many from information and communications technology sectors) failed to get the loan applications approved in recent years. The report which I have yet to find, claims that it provides further evidence of the damaging effects the credit shortage is having on the economy.
Whilst I understand attitudes to funding have changed and the banks have had a severe kicking, I do think we need to look further into the detail. My experience (we have worked with over 3,000 potential high growths!) is that lots of these businesses are just not investment ready and it would be ludicrous to give them cash and indeed subject the founders to PG’s – its for their own good in many instances.
Poorly thought through applications, business models just not viable and inexperienced management teams are also part of the reason for the lack of funds being pushed into the market. Whilst funding is harder to extract, there is cash for well thought through propositions, period. Many of the high growth potential (gazelle types) companies need to be nurtured, mentored and supported – we must look at the quality of the business plans falling onto the desks of VCs and funders, maybe then we would get a better view of the world. My advice to anyone seeking funding is:
1. Can you evidence a viable business model with customers that want to buy what you are offering?
2.Have you got the team in place – thinkers, doers, sellers and controllers
3. Do you have the resources to make it happen and do the financials stack up? More importantly would they stand scrutiny.
4. Can you articulate 1-3 clearly, concisely and convincingly.
If you can’t then dont blame the banks!