Business owners often view investors as an alternative to bank finance. In most cases entrepreneurs would seek to raise external equity because they are running out of cash and were turned down by a bank. The only message that investors would receive is that the entrepreneur lost control of their business regardless of how you dress the situation up. If you were an investor, would you want to put your hard-earned cash and invest significant amount of time in such a venture?
So, when is the right time to start raising external equity? And what can one do to ensure that the business is ready to attract and secure investors?