There is no denying that 2020 has handed investors, businesses, and entrepreneurs a lousy hand. From shutting down organizations to halting innovations, things seem to have gone from bad to worse — but all is not lost. It may feel that attempting to raise capital during COVID is a lost cause, but this does not have to be the case.
The Covid-19 crisis has thrown many things into disarray, and raising funds may be the furthest thing from your mind. While an economic downturn seems disadvantageous to those looking to raise capital during COVID, there are steps you can take. Investment opportunities are still being created, and your business may have a future.
Here at Club-E, we are dedicated to helping businesses be their best selves, and are here to help you handle any situation.
Why Is It So Hard To Raise Capital?
In the current economic crisis, investment opportunities may seem thin on the ground. As a result of uncertainty and a looming recession, the priority for most investors is security. The majority are looking to ensure that they have enough capital to get through the crisis.
This focus, on preservation rather than investment, has slowed the investment market to a crawl. Many investors have experienced uncomfortable volatility in the stock market and are apprehensive about getting back in the game. As a result, most engage in ‘watchful waiting’ to see how things turn out, rather than leaping into a new opportunity.
For those just starting, raising capital during COVID can feel like a losing battle. Startup founders are likely to find that their valuations are reduced, and terms increased. Investors will be more cautious, less willing to meet with companies seeking capital, and less likely to take risks.
Is It Possible To Raise Capital During COVID?
All is not lost, however, and there is some good news: raising capital is not impossible.
With a little creativity and innovation, there are plenty of chances to raise capital during COVID. Above all, you need a little determination. After all, you did not spend all that time working on your business to see it fall apart now.
There is an advantage; history is on the side of startups. Traditionally, stock markets and debt markets suffer during an economic downturn, leaving investors with capital to burn. It is estimated that around $189 billion is just waiting to be invested, a 50% increase from the last recession.
How Can I Improve My Chances of Success?
You can take a few steps to help improve your chances of successfully raising capital during COVID.
Be smart with your time.
Raising money can take time and needs to be taken as seriously as a full-time position. This means using your time effectively; be ruthless when it comes to your investors. If anyone seems nervous or uncertain, don’t be afraid to cut them out to focus on more serious options.
You should also explore the position of the investor; are they looking for a new portfolio or shoring up an existing offering? Have they ever made investments without a face-to-face meeting? These and other questions will help you save valuable time in your search.
Take advantage of technology.
We are all having to get used to a new way of working, and so it is time to embrace Zoom! Video calls are the closest you are likely to get to a face-to-face meeting and help speed up the process. You can use this to your advantage. Instead of having to travel to meet an investor physically, you can save time by video calling.
This technology allows you to speed up the process significantly and enables you to see the person you may be working with. Due diligence can also be sped up thanks to the evolution in video and file-sharing technology.
The decision to invest can be a very personal one, so it is crucial to make connections and build rapport with potential investors. This area is another that can benefit from video calls; you can see the face of the person you are talking to. Face-to-face contact offers a connection that cannot be achieved via email and allows each party to get to know one another.
It is a good idea to try and start building this rapport as early as possible. This will allow an authentic relationship to develop between parties. This genuine connection can seriously increase your chances of success.
Make business sense.
If you are looking to raise capital during COVID, you need a watertight business plan. Investors will want to know how you can weather the tides, why your business will survive, and what you can offer. What makes your offering different from any other?
A key here is to position yourself as an essential, as opposed to a desirable. Know what your customers and partners want and how you can help them and explain this clearly and convincingly. If you have doubts, an investor will hear these loud and clear.
Stick to short-term fact-based perspectives.
Now more than ever, you need to have a plan. You are asking for investments in a time where most people are cutting costs, so be prepared to prove your value. Have your customer base at hand, and demonstrate the way in which they will make money.
Remember to look at the short term, not just the long term; to raise capital during COVID, you need to show results quickly.
Will I Succeed?
Raising capital during COVID can be a challenge, but it is far from impossible. With a robust and solid plan, a profitable customer base, and the ability to spot opportunities, success can be achieved. Before long, you can have investors eating out of the palm of your hand.
Here at Club-E, we have a wealth of resources on hand to help you battle any challenge — even a pandemic. Head over for the ultimate toolkit for success, and see how you can help your business go from struggle to strength.