Have a thorough business plan, and if the banks say no, look elsewhere. These are two of the most popular strategies CEOs of 2004 PROFIT 100 companies have used to raise capital for their businesses. Here, the leaders of Canada’s Fastest-Growing Companies let you in on some of their lesser-known tactics.
- “Don’t overpromise,” advises William L. Hunter, president and CEO of Angiotech Pharmaceuticals, Inc. (ranked No. 66 on the 2004 PROFIT 100) in Vancouver. “I think there’s a tendency for people to think that they’re going to have to tell a really fabulous story to get somebody to want to invest. And, you know, it’s been my experience that you rarely go into a 20-minute meeting and someone gives you $20 million. It tends to be the fifth or sixth or seventh meeting, when people have followed you for a while, that they will commit their capital. I really encourage people to set realistic, achievable goals so that they can demonstrate to investors that they hit their targets.”
- “Everybody who puts money in wants to know how they’ll get it out,” says Art Aylesworth, CEO of Carmanah Technologies Inc. (No. 58) in Victoria, B.C. “Have a clear ownership structure plan and give some thought to exit strategy.”
- “Be prepared to put your money where your mouth is,” says Michael J. Cerny, president & CEO of Creative Building Maintenance Inc. (No. 80) in Mississauga, Ont. “The reality is that any reputable grade-A financial institution is going to expect you to put some kind of your own money up front to show your commitment and belief in your venture.”
- “Be frank and real about not just the upsides, but also the downsides,” says Anthony Lacavera, president and CEO of Globalive Communications (No. 1) in Toronto. “People tend to play up all the good stuff, but savvy investors will be able to discern the potential downsides. If you’re not ready to talk about it, you’re going to lose a lot of credibility quickly.”
- “Remember what the other party wants to hear,” advises Kathy Roberge, director of communications at Mediagrif Interactive Technologies Inc. (No. 46) in Longueuil, Que. “Entrepreneurs are from many different fields, but they should remember to adapt their presentation for who they are pitching to. So, for example, when pitching to financial people they should talk about margins, growth in sales, etc., within the first 10 minutes, or they’ll lose them.”
- “Go big instead of small or medium,” says Marc Morin of Medsurge Medical Inc. (No. 63) in North Vancouver, B.C. “If you need $200,000, don’t bother—try to get a million or two. A bigger number is often easier. People take you more seriously.”
- “Be prepared not to be paid,” advises Hugh Owen, president and CEO of Toronto-based Owen Media Partners Inc. (No. 82). Owen admits he sometimes goes through six to eight weeks without a paycheque—he is always the last person in the company to get paid.
- “Take calculated risks. Sell like an optimist, but run your business like a pessimist,” says Bernie Klein, chairman and CEO of Strategic Vista International Inc. (No. 59) in Markham, Ont.
Watch for the 2005 PROFIT 100, out June 6 on PROFITguide.com.