Anybody that has invested in a private business, dreads the call! we are looking further funding!!!
But what do you do when your investment is losing money?
Anybody who has invested in unlisted business, starts seeing the warning signs!
1. Poor trading results
2. Rumours of slow payment
3. Discussions with bankers
4. And then invariably the call for more equity.
This time around the pitch lacks the enthusiasm and optimism that was evident when the initial investment was made (even the celebratory dinner), this is replaced with an urgency and threat of impending doom.
The first step, is to acknowledge there is some aspects of the grieving process (depending on how material the investment is), the initial dream is dead, and that you need to go through all the stages;
After you have achieved acceptance ,the initial investment process needs to be repeated (as if it were a fresh investment) this time you have the benefit of hindsight, initials assumptions updated, the track record of management, the complexities of the market, and what the eventual exit (or payoff) will look like
My next post will be on, extracting the learning from the investment, and how to use this to improve your investment process.