Best Practices for Raising Capital

By Welch Capital Partners on
May 18, 2023

Are you hoping to raise capital? Here are some best practices:

In today's market, many companies often need to raise capital to grow their operations and to achieve their long-term goals. Whether it is to fund new product development, expand into new markets, or acquire other companies, raising capital is a critical part of the business development process. However, preparing for a capital raise is not a straightforward process, and companies need to take a strategic approach to ensure they are ready.

Step 1: Assess Your Financial Position

Before you start seeking capital, it is important to have a good understanding of your current financial position. This includes your revenue, expenses, cash flow, and overall financial health. You should also have a clear picture of your current financial needs and how you plan to use the capital. This information will be critical in determining the amount of capital you need to raise and the type of financing you should pursue. Capital is more expensive these days, so understanding the optimal level and type of capital you need is critical.

A clear articulation of your "sources and uses" (in other words, how much capital you need and how you will use it) is an important consideration for all investors. Investors want to know you will use their capital wisely and execute on your business plan.

Step 2: Develop a Business Plan

A well-written business plan (or pitch deck) is essential for attracting investors and securing the capital you need. In some cases, you may need to prepare an offering memorandum (to be discussed in a future article) or a bank package. Your business plan should include details on your existing business as well as your future growth strategy and reasons for the capital you wish to secure.

It should also include a detailed financial plan, including your projected revenue, expenses, and cash flow. Building the financial plan or financial forecasts is a complex and intensive process. Ideally, forecasts should provide a roadmap for the execution of your business plan from a financial point of view. The financial forecasts must be integrally aligned with the company’s strategic objectives and growth plan. Here are a few suggestions for building reliable forecasts [1]:

  1. Start with a clear understanding of your business: A solid understanding of your business operations and the industry you operate in is essential for accurate forecasting.
  1. Use historical data: Use past performance as a starting point for forecasting future results. This includes analyzing financial statements, sales data, and other relevant metrics.
  1. Consider external factors: Be aware of the economic, competitive, and regulatory environments that may impact your business.
  1. Be realistic: Forecasts should be based on realistic assumptions and expectations. Avoid overly optimistic or pessimistic scenarios that are unlikely to occur.
  1. Use multiple forecasting methods: Using different forecasting methods, such as regression analysis or trend analysis, can help provide a more comprehensive view of future performance.
  1. Incorporate sensitivity analysis: Consider how changes in key variables may impact your forecast and include sensitivity analysis to assess the robustness of your projections (and to project more confidence to investors that your forecasts are reasonable and well thought out).
  1. Continuously update and review your forecasts: Regularly review and update your forecasts to reflect latest information and changing circumstances.
  1. Communicate your forecasts clearly: Present your forecasts in a clear and concise manner, highlighting key assumptions and potential risks.

Remember, forecasting is an ongoing process that requires continuous refinement and adaptation. By following these best practices, you can improve the accuracy of your forecasts and make better-informed decisions for your business.

Step 3: Building a Strong Team

Having a strong and experienced management team is critical to the success of any capital raise. Investors will want to see that your company is led by competent and experienced professionals who have a clear understanding of your business and the market you serve. You should also consider adding additional team members where you have identified skills gaps, as well as advisors to help you navigate the capital raise process.

Step 4: Identify Your Target Investors

Identifying your target investors is a critical step in the capital raise process. You should consider factors such as the type of investor you are seeking (e.g., strategic investors, growth equity funds, family offices, etc.), the size of the investment you are seeking, and the stage of your company. You should also consider the investor's investment philosophy and their past investments to ensure they align with your company's goals and values.

Step 5: Network and Connect with Investors

Working with an Exempt Market Dealer such as Welch Capital Partners Corporate Finance can connect you with the investors you need. Soliciting investors on your own can be done, but it is a time-consuming process that often requires owners and management team members to compromise their operational duties. Networking and building relationships with investors are critical parts of the capital raise process.


Preparing for a capital raise is a complex process that requires careful planning and preparation. By assessing your financial position, developing a solid business plan, building a strong team, identifying your target investors, preparing your pitch, and networking with investors, you'll be well on your way to securing the capital you need to grow your business.

Welch Capital Partners Corporate Finance is an Exempt Market Dealer and is regulated by the Ontario Securities Commission. Our sister company, Welch Capital Partners Inc., is a boutique investment bank that has been offering M&A and valuation services to customers since 2009.

If you are considering a raising capital and would like to better understand our approach, please contact Adam Nihmey at

[1] Note that all forecasts will be wrong (actual performance will either be better or worse). However, "reliable" forecasts are supported by data and evidence and are well thought out and thoroughly prepared by those who have expertise in this area.

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