RT Ch1: Access to Capital for Entrepreneurs: Perspectives of Angel Investors, Venture Capitalists, and Bankers

From the Book: The Refractive Thinker® Vol XVII: Managing a Cultural Workforce: The Impact of Global Employees

Summary

Despite the importance of entrepreneurs and their venturing to the economic growth and vibrance of the aggregate society, entrepreneurs struggle to obtain access to capital from outside investors and banking institutions. This article includes exploration of the phenomenon of how entrepreneurs access capital by identifying many similarities and differences between outside investors and bankers that entrepreneurs should know and prepare for to increase their chances of securing financing. We interviewed eight entrepreneurs, seven bankers, and eight BAs and VCs who had (a) at least 15 years of experience in entrepreneurial finance, (b) represented a diversity of industry experience, (c) had funded and grown successful companies through all stages of the business cycle, and (d) had raised, borrowed, or loaned a minimum of $50 million dollars. We found that BAs, VCs, and bankers primarily look at the character and integrity of the entrepreneur and the perceived risk of the venture to make their investment decision. Consequently, entrepreneurs increase their chances of accessing capital when their fundraising pitch to BAs, VCs, and banks clearly conveys their integrity, readiness, and a reasonably matched risk and reward for an investment in their venture.