Read: 745
Guide to Strategic Expansion: A Roadmap for Canadian Companies Seeking Capital in the U.S.
In this comprehensive guide, we will navigate the complex landscape of rsing capital from U.S. investors, from identifying prospects and engaging with them, to negotiating term sheets and closing deals that will fuel your company's growth across the border.
Access now
Building a Strategic Financing Roadmap
To develop an effective financing strategy roadmap, you must first have defined your business model and set out a clear execution plan, including key milestones for your venture. Additionally, it is crucial to compile a list of critical assumptions about your operations:
Product Performance Metrics
Customer ROI Return on Investment
Market Size and Addressable Market Potential
Target Sales Volume
Gross Margin Direct and Indirect Sales
Number of Sales Calls per Sales Team Member
Conversion Rate from Prospects to Customers
Length of Sales Cycles
Technical Support Calls per Unit Shipped
Payment Cycle for Receivables and Payables
Compensation Requirements for Sales, Distribution Teams, RD, QA, Marketing, Customer ServiceOperations, Finance, and Resources
Regularly track and test these assumptions. If they prove inaccurate, react promptly and adjust your strategy accordingly. Ideally, you can link most of the major assumptions to key milestones set by your business. Upon reaching a milestone, testing related assumptions should be part of your routine.
Creating Your Financial Blueprint
Utilize your list of assumptions, defined business model, and execution plan to develop a comprehensive financial blueprint for your company:
Monthly cash flow forecast for the next 24 months based on bottom-up projections
Annual income statement covering the same three to five-year period including market forecasts, gross margin targets, and earnings expectations
Balance sheet may be required deping on the stage of your business and type of investor; however, you should consider any cash requirements associated with capital expitures or debt repayments, as well as working capital needs for inventory and accounts receivables. These elements should all be accounted for in your cash flow forecast.
Include two alternative scenarios: an optimistic outcome that demonstrates sales traction and a pessimistic outcome with the assumption of minimal sales traction.
Determining Capital Requirements
In each funding round, investors will seek to understand if your business has achieved key milestones and demonstrated sales traction. The hierarchy for evaluating sales traction is as follows:
Sales
Field testing or pilot sites
Agreement on field testing or pilot use prior to shipment
Establishment of a contract for pursuit of field test
References from customer proxies mnly sought by angel and seed investors
Positioning higher in this hierarchy will make fundrsing easier. If you do not have at least an agreement for pursuing field tests, difficulty rsing money from traditional venture capital firms is likely.
To develop your financing roadmap:
Calculate the total capital your business will require until cash flow can break even according to your probable financial plan. It's advisable to show a range of potential capital requirements by adding 10 -25 on top of the maximum requirement.
Split this funding into desired rounds of financing typically two to four rounds. Each round should provide enough funds to enable you to achieve each major milestone in your business execution plansuch as shipping commercial products to customers or entering Phase II clinical trials. Also, communicate target investment ranges per round based on investors' expectations regarding your financial projections.
Factors that may affect the amount of funding rsed:
Investment avlability for your company
Investment terms valuation and conditions
Market conditions affecting investor perceptions
Sales traction potential
: to align with investor expectations, ensure all financial projections are realistic.
Sign up now to receive our monthly Startup Resources newsletter about building high-growth companies.
Enter your eml
You may unsubscribe at any time. For more information, visit our Privacy Policy.
Discovering MaRS:
Our mission
Startup services and partnerships
Investment opportunities
Space and location detls
About us: Our team and history
Career opportunities
Resources library for business growth
? 2024 Copyright MaRS Discovery District. All rights reserved.
Accessibility service policy
This article is reproduced from: https://learn.marsdd.com/article/developing-a-business-financing-roadmap-and-financial-plan/
Please indicate when reprinting from: https://www.ci56.com/Financing_investment/Strategic_Expansion_Canadian_Companies_US_Capital.html
Strategic Canadian Business Expansion Planning US Capital Raising for Businesses Global Financing Roadmap Development Financial Blueprint Creation for Growth Sales Traction and Investment Attractiveness Funding Rounds Scheduling and Execution