One of the businesses I'm involved with (on the tech side) is kind of stuck. It has some good opportunities, but insufficient capital to properly pursue them. It's investors are apparently unwilling to increase their investment and it doesn't have sufficient collateral for a loan. At the same time, it's growing (which is a good thing), but running out of runway.... current projections indicate it has about a year. I hear that like increase sales, raise new capital and/or cut expenses. The current sales projections already include sales increases that are challenging. Apparently, the current investors don't want new investors, believing that we should go farther/faster with our current capitalization. The finance side is not my area of expertise, so would appreciate any ideas.
What are some types of business strategy for growth?
Answers
Your best option is to convince current investors to provide more capital. Take your current business plan and position it similar to an offering document. Provide exhaustive market research that shows that your sales projections are attainable. Include a complement of return on investment statistics. Remember to include a section in your plan that states what will happen without the additional investment.
I have been down this road before. If you have a history of achieving goals, the discussion should be easier. If your history shows pie in the sky ideas, an investor will consider your plea as a request to throw good money after bad.
Good luck.
Ask the current investors to make a loan to the co instead of equity. This way they have priority debt with a current interest rate return.
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Why would I, as an investor, who may be questioning my investment in the first place, loan more money to a company?
Isn't that like throwing good money after bad? Or is it that my investment is covered under the theory of "too big to fail"?