3 IMPORTANT TIPS OF GETTING FUNDED
Want to get funded? Then pay attention!
Funders have a limited attention span.
Anything that makes them uneasy and difficult to understand, your project is as good as in the bin.
Know thy Funders
Know who your potential Funders are before you send them any proposal
Who are these Funders?
They may be Family Offices managed by professionals or family members, Fund Managers who look at capital preservation more than a shoot for the stars, or Institutions who are chasing after magic numbers. Every funder has its mandate, priorities, and preferences. Once you understand their spaces, you hit the nail. However, understanding them is only the beginning of an arduous journey before the funds start flowing.
Be Prepared. Be Very Prepared.
Developers are more prepared to borrow money from the banks than pitching to Funders.
As far as the bank is concerned, what the developer can provide as collateral is the main concern as well as the ability of the developer to pay.
Funders, on the other hand, are more concern about the risk and returns balance.
As far as risk is concern, the developers should provide at least 3 main documents:
- Feasibility Study Report
- Executive Summary or Business Plan
- Proforma Cash flow
Many developers will just provide a Company's profile and a Project Profile with some mediocre spreadsheets, that show average prices p.s.f. or p.s.m.
The Exit Plan
Developers are very weak in this final point.
A market trend and statistics showing demand is not an exit plan.
A track record showing past performance is not an assurance of an exit plan.
A strategy or suggestion of selling to a REIT, potential Buyers or a buyback guarantee is not an exit plan.
An exit plan is an assurance for funders to exit on specific terms, timeline and profitability.
If you have all these 3 in place, chances are you will make it to the Funders desk for consideration.