For many businesses aiming for significant growth, capital raising can seem like a necessity to achieve the next big goals. However, choosing to raise capital is a significant decision for any private business, and cannot be simply prescribed with a ‘one size fits all’ approach.
Watson’s Corporate Finance team often advise on this in their work with clients. He emphasises that first of all, it’s crucial to spend time thinking about where raising capital fits into the overall strategy, as well as getting advice from those with experience. It’s a process that requires research and understanding. According to Watson:
‘Capital can be very useful, particularly for companies that have growth ambitions, but they must be clear around what that capital is going to be used for and how it fits into their strategy, as well as what they’re giving up in exchange for capital and what strings are attached.’
Companies must understand whether they’re in the right position to get started and if the timing is right, with an understanding of the potential road ahead. They should be clear with prospective investors too, and find out exactly what those investors would expect from the business in return.