5 changes that businesses made to the way they raised capital in 2016 — A post from the future
2016 was a great year for the growth of SMEs in Singapore. Over 100 Singaporean SMEs have now expanded successfully into new markets either regionally or globally. While many of these companies had been around for at least 3 years, we noticed quite a few accomplish the milestone of going global in under a year. We spoke to some of the owners of these businesses about the reason for their success and we wanted to share with you a few things we noticed that they all had in common.
- Regular Business Valuation
Business valuation became a quarterly event rather than just something they dis when they needed to raise capital. We found that more businesses were able to answer the all important question, “what’s your business worth?” regularly, rather than only when taking on investments. Your business valuation should be something you have handy at all times as it will help you to answer your current or potential investors as well as media inquiries when doing PR. It shows that you’re an entrepreneur who plays an active role in measuring successes or failures.
2) Explored More Funding Options
The reason many companies fail at fundraising was simply because they were looking at the wrong funding option. There are many options out there and you should only apply for the one that you are most likely to receive. Failed investment applications can leave a bad taste in potential investors mouths as it raises an alarm that something might be wrong with the applicant.
3) They received the full round of funding
A big problem for entrepreneurs or even SME owners was that they weren’t able to close the full round of funding. Traditional financial institutions always found a way to only partially fund the business leaving them with 20–30% short of the funds they needed to achieve they business goals. With the extensive growth of FINTECH companies, more options were suddenly offered to businesses and these business owners who only managed to raise a partial round, were able to raise the balance from the newer Fintech companies.
4) Peer to Peer Lending Became A Big Thing
Instead of only raising funds from Traditional institutions, businesses opened up to raising capital online and taking on unsecured personal loans. While there are advantages to taking on financing from traditional institutions, there are also advantages to take on P2P loans and these seem to outweigh the risks for both lenders and borrowers.
5) Invoice Financing became a thing too
Taking on funding against invoices became a huge practice in 2016. While businesses had to forgo the profits from the invoices they exchanged for financing, it didn’t seem to matter when measured against businesses’ long term goals. This form of funding ensured that businesses received the capital they needed quickly so they could concentrate on working towards achieving their vision.
Pealo has been honoured to have introduced the platform early in 2016 to help facilitate the behavioral shift of entrepreneurs and SME owners and we assure you that we will continue to innovate and build a platform with your interests in mind. We also want to thank you all for trusting us this past year. We are only successful because you are so from the bottom of our hearts, thank you all.