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Article: Why can't my banker be my venture capitalist and what can I do about it? How venture capitalists and commercial lenders approach investments. (Financing Franchising's Future).
- Article from:
- Franchising World
- Article date:
- October 1, 2002
- Author:
CopyrightCOPYRIGHT 2002 International Franchise Association. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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How often does a prospective borrower complain that "if only his banker would take a chance" or "why doesn't her banker believe her forecast?" These remarks, made after a loan proposal has been rejected, reveal that the prospective borrower does not understand a lender's risk or return profile. As a result, the prospective borrower is presenting the wrong proposal to the wrong capital provider.
To help identify the appropriate capital provider and to increase the chances of financing success, it's important to first explore the different philosophies of venture capitalists and commercial lenders, then offer suggestions on the best way to approach a lender. ...