For many start-ups it is difficult for them to determine how much money they wil l need to raise for

their business. It should not be a difficult question if yo u have already put together real world financial forecasts for cash flow, net in come and capital investment. A detailed financial statement forecast would prov ide all the information you would need. However, if your question is really abo ut how much you should try to raise and the level of difficulty, then the answer depends on various factors. Let s go through each question in detail. How much money should I try to raise? Again, the basis of the answer to this question are your financial statement for ecasts. As the funding seeker, you must be familiar with your forecasts and the key assumptions that hold your forecasts together. At the end of day you are a sking for others to invest in your business and they need to be comfortable that you know what to with that investment. Common questions a potential investor w ould ask include: When will the business start making a profit? How long will you be able to sustain the business before needing additional cash investments? What will the money invested be used for? How does your business compare financially to other businesses in your space ? (i.e. competitor analysis) Earlier I alluded to the fact that the amount your financial statements reflect that you need to run your business differs from how much money that should be ra ised. For example, Company A has a start-up service business that financial fore casts show a net loss of $1 million in the 2nd year of operations and thus the b usiness will need $1 million cash infusion to keep the business viable. The for ecasts also show that after year 2, the business is profitable. Initially you m ay think that you only will need to raise $1 million; however, you need to take into account the key assumptions of your financial forecasts. What happens to yo ur financial projections if some key milestone is delayed and raises year 2 net loss to $3 million. You need to take into account risk factors of achieving key financial milestones in determining the amount of capital you need to raise. How hard is the capital raising process? The skill sets needed to raise capital differ by funding round category. The ca tegories are as follows: Under $100K - Friends & family - Credit cards - Home equity loans - Selling investments and other assets - Borrowing against retirement assets such as your 401K $100K $1 million - Angel investors - Commercial lenders - Small Business Association (SBA) loans Series Funding $1 million + - Venture Capital/Private Equity firms - Investment banks - Initial public offering (IPO) via stock market - Sell business to another firm Each category has pros and cons and only you can determine what fits your situat

ion best. The difficulty level of capital raising depends on the level of fundi ng you are seeking as well as the industry you are in. The lower the level of f unding the easier it tends to be. For example, the under $100k funding round is people you already know and should be able to get funds from. As you go up the funding ladder, you have to find people who are specifically interested in your business area. For example, many private equity funds focus on particular market segments such as online gaming. A online gaming fund will not be interested in a widget manufacturer. In addition, the higher the funding the more control of the company you will have to give up. After the $100,000 funding level, each level will require the following steps: Finding interested investors Due diligence process Filing SEC (for IPO only) Funding Depending on how long each of these steps take, the process could be as short as a month or many months. In summary, decide how much funding you really need to remain viable by getting to know your financial forecasts including risk factors, determine what funding method works best for your business and for the level of control you want to mai ntain and then line up potential investors that fit your parameters as well as y our industry.