del.icio.us
Digg
Sphere
Stumble
Technorati
Twitter
It’s all about the Money: Financing Your Dreams
By Andrew
We closed on our “Series B” financing in April of this year. Thinking back, I can’t believe how fast and smooth it all went. It was exciting to see groups actually competing for the chance to invest in our company. We had sure come a long way from the days of going “door to door,” looking for investors with the slightest interest in our dream.
For any small and growing business, cash, grease, bucks (any of the 40+ other words Wikipedia has for money) is KING! Good cash flow and cash management are extremely important to business of any size.
Southwest Windpower is 20 years old. The growth of our company has been no different than many others before it, and many others to come. We grew the business as much as we could, up until the point when growing any larger meant bringing in outside money. In the early days, we turned to our friends and families to help us along. That initial small investment brought us more sales and good bank relations. We grew fast during the ‘90s and even bought our largest competitor. Everything changed with the economic downturn in 2001. The old saying that “banks only want to lend you money when you don’t need it” is absolutely true! The moment we went into the negative, our bank sent the “boys” to see us. We made good on our debts, but that bank still owes me my hair.
When our company embarked on a new small wind technology – the Skystream -- that required millions in investment, we assessed our options. We could either grow the business internally with available cash and good bank relations or we could invite investors to come take a chance on us. Although, for some, the VC world can be both friend and foe, we were fortunate to end up with absolutely terrific people. The first round was not easy -- “series A” took two years and countless interviews. The second round went much faster, series B took three months and we were almost fighting interested VCs off!
A word about VCs, they generally invest in what they know the best. Some focus their resources on specific regions of the country. First and foremost, VCs assess a company’s management. Only then do they look at the product and the market potential. Also, VCs see as many as 50 business plans a day. To capture a VC’s attention, It is important to keep your plan short (25-30 pages max) and easy to read (comb binders and tabs). Make it professional! The hardest part is getting out of the stack and into the “keep” pile.
Today, with the world so connected, investors can be found everywhere. A good friend of mine works for a solar company in New Jersey that is backed by an investor in Hong Kong.
Raising money is no easy task. It is both challenging and time-consuming. But when funding is accomplished and put to good use, nothing is more rewarding that watching your dreams take flight!
Comments (3)November 8, 2006 7:43 PM
Comments (3)
A very well written and informative post. Refreshing!
Posted by Tom Parrott | November 8, 2006 10:00 PM
Posted on November 8, 2006 22:00
This is a wonderful post.
Shame on Slate for pairing Mr. Kruse with a completely naive and useless Ms. Bonney.
Posted by Anonymous | November 20, 2006 7:50 PM
Posted on November 20, 2006 19:50
"This is a wonderful post.
Shame on Slate for pairing Mr. Kruse with a completely naive and useless Ms. Bonney."
Shame on you - the article on making money from a blog is excellent - I agree that this one is also.
Posted by Francis Fish | November 24, 2006 12:05 PM
Posted on November 24, 2006 12:05