Financing Innovation — Planning

1. Clearly define the project

Projects are often poorly defined; they are vague and open to interpretation. Therefore, you must clearly define the prime objective of your project.

2. Establish a strong business case

On one or two pages, you should be able to summarize your organization's business model and position it within your current activities. It should outline the company's assessment of its vision, objectives, market needs, target market segments and the reasons for them, as well as strategies for R&D, marketing, HR, etc. Lastly, it should include your funding requirements and financial strategy.

3. Develop a good business plan

Many investors find that business plans are overly theoretical, and lack analysis and solid data.

Investors receive a great many business plans; for yours to stand out, you have to sell it. The quality of the contents and the presentation are both important. Be sure to provide:

• A good executive summary.
• Solid content.
• Structured text that is well spaced, and printed on both sides to reduce the thickness of the document.
• Ensure the spelling is correct.
• Graphics and diagrams in colour.
• If there are bulky appendixes, place them in a separate document.

4. Prepare a convincing presentation

• Create a PowerPoint presentation that outlines the main elements of your business analysis.
• Practice the presentation and request feedback.
• Anticipate possible questions and appropriate responses.

5. Establish the approach strategy

• Make a list of potential sources of financing.
• Identify preferred sources of financing, given the financial strategy and the funds required for the project.
• Identify the appropriate people to approach for financing (in advance, gather information on these people, the types of projects they prefer, etc.).
• Request a meeting/presentation with the appropriate people/sources of financing.
• Establish a negotiating strategy.
• Be discreet in your approach - this is a very small world.

6. Follow the plan — don't improvise!

It is important to keep to the game plan. As we've already said, investors talk to each other; therefore, it is of prime importance to be consistent.

7. Make the investors compete with each other

As much as possible, to improve your negotiating position, make the sources of financing compete with each other (e.g., one bank against the next).

8. Negotiate small amounts at a time

It is possible that your project requires a large sum and it would be ideal if you had an early commitment for it. But investors are rather conservative. At the beginning, it might be easier to search out smaller blocks of money to buy time, and to be able to go forward while continuing to negotiate. However, this requires a lot of management time to continually prepare documentation and justifications. Thus, looking for financing is a continuous process!

9. It takes tenacity and patience

You mustn't be discouraged by the process. You have to accept that the search for financing will take much longer than you expected, whether it's a subsidy or a government loan within a program initiative or private financing through banks or venture capital.

For example, it could take six to 12 months to obtain bank financing and/or venture capital. For government programs, it could take between two months (for small amounts) and six months (for more substantial amounts) before approval is granted and you receive the money.