ATTRACTING INVESTORS A MARKETING APPROACH TO FINDING FUNDS FOR YOUR BUSINESS Philip Kotler Hermawan Kartajaya S. David Young ® WILEY John Wiley & Sons, Inc.Copyright © 2004 by reserve. Kotler, Hermawan Kartajaya, and S. David Young. All rights Pablished by John Wiley & Sons, Inc. Hoboken, New Jersey iy for a partieular purpose. No ‘Kotex, Philip. 1 marketing approach to finding funds fr your Hermawan Kartajaya, and S. David Young, s—Finanee, 3. New business smawan, 1947 Tl. Young, §. avid. 1, HG#7S1.K68 2008 658.187224—de22 Printed inthe United Staes of America wea76s4as2a 2004008610 CONTENTS Preface vii Part One INTRODUCTION 1 1 Marketing to Investors and Lenders: ‘What the Capital Markets Want 3 2. Raising Capital: An Overview of Your Alternatives 17 Part ‘Iwo UNDERSTANDING INVESTORS AND LENDERS 55 3 Early-Stage Financing: The Role of Business Angels 57 4. Private Equity: Unleashing Your Company's Potential Value 73 5 Lenders: Raising Funds from Banks and Other Financial Institutions 1177 Tactic: How to Win Investors’ Market Share 189 8 Value: How to Win Investors’ Heart Share 213 Part Four EPILOGUE 235 9 Get Your Marketing Right! 237 Index 241 PREFACE THE PROBLEM: YOUR BUSINESS NEEDS MONEY business firm and start-up firm needs money, Money must be borrowed to support payroll, material, equipment, and other costs before any revenue materializes, |: money that makes the world go around,” Every existing who is burning with a hot idea. You will importune family, friends, neighbors, venture capital firms, and banke for help. You will promise a several-fold return. You will argue that this 's not charity, but a chance for the investor to make money while helping you build a great new business. OF you may be an existing small business owner who uns into a cash flow problem. You will rush to your bank pleading for an extension of credit. You will need to make the best case funds with interest! You might have to seek out anoches bank, iy, Or neighbors for financial aid to carry yous business through the crisis, OF you may be part of a rapidly growing large firm that vii