A conversation we have with capital seekers early on in the process is, what is going to be the cost of the whole capital raising process? The answer to that, like the answer to a lot of questions, is, it depends, but there are some general guidelines to follow.
The first consideration is the business plan. Does the capital seeker's company have a business plan? Well, if not, they are obviously going to need one. So, they should consider what it is going to take to put one together. If they have the time and capability to write one themselves, great. But even at that, they should also plan on spending at least a month in putting it together. If they do not have that kind of time or need some help with part of it, and if they want to get advisors to bring in to help in writing the business plan, plan on spending $5,000 on the low end and, for a really complex business with a lot of content in the business plan, upwards of $30,000.
Another thing to think about is advisors. Does the capital seeker know enough to catch all the pitfalls of the capital-raising process? If not, advisors may be money well spent. Depending on the type of advisors you get and the amount of time that a capital seeker would use them, $7,500-$10,000 is a good place to start.
Marketing expenses, just think of all the color copies of the business plan, all the flying around to the different presentations and meetings, those costs easily get into the $10,000-$15,000 range.
Legal and Accounting costs. These are probably the costs that you cannot avoid unless the capital seeker happens to be an attorney, and their partner is a CPA. There are documents involved that are going to have to have legal review, and there are financial compilations involved that are going to have to be done by a CPA. I would think a minimum amount to budget there would be $5,000.
You know, how much all in? It is hard to say, but if you wanted to start with a nice round figure, I would think that $30,000 would be a good place to start and then take a real solid look at your business and add/subtract accordingly. If a capital seeker has problems in quantifying this cost or what it may really cost them, I would encourage them to contact us at the Capital Match Point. Because at the end of the day, we are ultimately in the business of maximizing their chance of getting funded.

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