Private Businesses Find New Ways To Fundraise During COVID-19

By:
Graham McConnell
Private Businesses Find New Ways To Fundraise During COVID-19

Communication is a top priority for any company, especially now as many navigate their businesses through the challenges COVID-19 has brought. As companies shift to working remotely and identifying new offerings to bring to market, the approach to sustainable growth has evolved. This environment requires new strategies for private companies, especially when it comes to communicating with shareholders and raising capital.

Accessing capital is the number one challenge for small businesses, even when market conditions are positive. The federal government’s Small Business Administration reports that roughly half of small businesses last longer than five years. Overhead costs leave very little liquid cash or compensation to owners, especially in the early years. Today, it is vital that small businesses seek out the tools and practices to reduce overhead costs, streamline operations, and keep investors engaged to ensure long term success.

Many companies have decided to halt fundraising efforts, believing it best to wait until the market regains strength or you are able to meet in person. Unfortunately, that’s not always an option. It’s important for many companies to continue to push forward, shifting past practices to new ones that will better the business.

The transformation is not without its concerns for founders and business owners:

“Being a founder forces you to take on roles you've never had before. Just a few months ago, I didn't know much about: Fundraising, Cap table management, Equity distribution, legal paperwork, Accounting + building operating plans, and Internal IT/infra.” (Jessica Meher)

Nevertheless, shareholders and investors alike want more oversight to ensure the company is not only withstanding current economic conditions but also has a long-term plan in place. "Investors may feel like they want a tighter finger on the pulse," says Rachel Proffitt, a partner at the law firm Cooley. Business owners, therefore, need to communicate their plan to shareholders. In the face of troubling data—such as the prospect of GDP falling 12%, or unemployment possibly staying in the double digits through 2021 (CBO)—strong shareholder communication will help you adapt to the new reality.

Part of the new reality is leveraging tools and resources to efficiently and affordably meet these new owner responsibilities and investor demands. Using a platform to communicate with shareholders is a great way to keep investors engaged, and is a great selling point when fundraising. If you’re leveraging equity to help keep employees engaged, having equity management tools will help you keep track of everyone’s ownership, and may even help employees to better appreciate that ownership.

Nth Round offers the tools to streamline these operations all in a single, secure environment. The complete equity management platform gives you the means to communicate with shareholders in a private investor portal, raise capital from investors, and commit to transparency for the full lifecycle of your business. While COVID-19 has created market turmoil and much unrest, staying true to your company’s needs and vision will ensure stability and long-term success. Learn more at NthRound.com.


Graham McConnell

Graham is an entrepreneur with strong passions in finance and technology, especially software development, cyber-security, and blockchain protocols. After stints at TA Instruments and Savana, Inc., Graham joined Relay Network, where he served as product owner, managing priorities for a team of twelve software developers and test engineers. Drawn to finance, Graham then joined AJO Partners ($25B AUM), a top-tier quantitative investment firm, where he oversaw software development. Today Graham runs all aspects of Nth Round operations: from product development, to sales and marketing, to customer support.