Reuben Singh. A British entrepreneur, I am the Founder of alldayPA, the UK's largest 24-hour telephone answering services provider and the CEO of Isher Capital, a boutique private equity fund. http://www.reubensingh.com

1. My Experience in Raising Finance
By
Reuben Singh
From the age of 17, when I launched my business, till today I have probably been involved in
10 or 12 different fundraising situations. Most of these have been for different deals and
some of them for the same venture.
I have to say they have always been the most tiring and disheartening, if not the most boring,
experiences I can remember. Initially I only ever raised funds when I needed the money and
that, I have since learnt, is the biggest mistake. No one wants to lend or invest in your
business when you need the money and, when raising money in desperation, you will always
make the biggest mistakes.
When to raise monies
Raise funds when you and your business do not need the money and you will always raise
more at a better price and have more people interested. Why? I really don’t know. I am only
sharing my experiences!
If you are starting your business then raise funds at the beginning without spending any of
your money. This is what people in the VC and Private Equity world call ‘seed capital’.
Nobody pays much attention to the money you have already invested and would rather see
that money put in by you when they invest their money. This is known as ‘hurt money’. In
relative terms, they want to see that the money you will put in will hurt you just as much as
the amount they put in will hurt them should the venture go wrong. So it is best to find the
seed capital before you invest your own money.
However, I have always been fortunate enough to have just about enough money to get the
venture off the ground and then have gone out to raise more money afterwards (and this has
more often than not caused me big problems - running out of cash is dangerous).
I have seen that when you raise monies on the premise that you are looking to the future and
either looking to expand the business or invest in diversifying the venture, but you add the
fact that “I really don’t need the money at the moment to continue running the business

2. successfully in its current position”, it seems to attract a much more positive response from
everyone.
In a way it demonstrates you are a planner, you are well prepared for the future, and you are
looking at the long term vision for the business rather than just firefighting or living in the
present without ambition. If you look at raising money when it is clearly not needed to keep
the business in the healthy position it is in today then you will find that you have much more
time to consider your options, I know this sounds simple but believe me it took me years, if
not more than half my business life, to figure this out.
Who to raise money from
Someone who understands your business or understands you better than others. Simply
put, go and raise money from someone who is already in the industry, is in a related industry,
or someone who has already been successful in the industry. Or go and raise money from
people who know you. They may not know the industry but may be able to understand you.
This is known as “peer-2-peer lending” or going to friends and family.
I have found that regardless of whereabouts in the world, if the investor or lender has some
knowledge of your industry they are much better and easier to speak to than someone who
may be local. Whilst the local investor has the money, they may not have a clue about what
you are trying to do with your business and more importantly, do not have the desire to
understand - they just want to make a return on the money they invest or lend.
When I was in the retail business I found the best people to speak to about investing or
lending me money for the business were my suppliers. They not only knew the industry well
but had two advantages for lending me money:
•They were able to sell me more goods and further their own business
•They would have another channel to market if I failed and they took over the business
In 1998 I needed to raise monies to expand the business and found that after spending
weeks and months trying to raise additional funding that it was a supplier of mine that
agreed to lend me the money for my business. He understood what I was trying to achieve
more than any bank or conventional investor and was able to not only provide the capital I

3. needed, as a loan for a short period of time, but more importantly was able to give me
invaluable advice - after all he now had a vested interest.
This happened again to me a few years later but this time it wasn’t to grow the business but
to try and rescue the business from a grave situation. This time it wasn’t a supplier or
someone who knew the industry that help me with the capital raising but someone who
knew me and understood me rather than knowing much about the industry.
In both situations luckily the outcome was successful but like anything I must be clear that
when someone invests or lends your business money, there is always risk as without risk
there is never reward.
Always try to find an alternative before trying to raise money
If you are trying to raise money for a start-up business then I would recommend considering
other methods of obtaining whatever you need without having to pay for it:
1.The traditional bartering system sometimes works in business and if you have a service or
product that could help someone in their business why not consider bartering your
service/product for theirs?
2.Offering a supplier a long-term supplier contract with some upside reward of slightly higher
prices for extending longer credit terms or perhaps a percentage of the sale price you
achieve when you sell the goods.
3.Offering your customer a reduced price and some security perhaps in the form of equity for
paying you in advance or without any payment terms works. I have seen many examples of
this and recently heard of a very famous hospitality business owner in London who used
future clients’ monies to build his business. His clients enjoyed massive discounts for paying
upfront and the business is now an exceptional success.
4.Looking at a joint venture partnership with another business or entrepreneur in a
complimentary business where both of you have mutual clients or mutual suppliers and
could enhance each other’s businesses. I once needed to raise money to purchase goods
from a supplier who would not manufacture the goods until the money was paid or
deposited with my bank. The amount was significant and I could not raise the monies. I

4. found a company in another country who, for a percentage of the profits I would make from
the sale of the goods guaranteed to my supplier (who they dealt with too), would pay the
supplier if I failed to. They also asked me for some equity security in my business if I failed to
pay them back. They were based in another country so there was no direct competition and
they had a win-win situation. They would either make money from the deal as I had
committed to give them a percentage of the profits or else they would gain a stake in a
similar business and a foothold into the UK.
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