Raising capital is one of the most challenging and important activities for any business. It requires not just a compelling story and strong financials, but the right strategy, the right preparation, and the ability to execute a demanding process while continuing to run the business. Martin Sumichrast has led or participated in hundreds of capital raises across more than three decades, from small private placements to large public offerings. This article shares the key principles that determine whether a capital raise succeeds.
What separates companies that raise capital well from those that struggle
Successful capital raises begin long before the company goes to market. The preparation work — building the financial infrastructure, refining the business model, strengthening governance, developing investor materials, and cultivating relationships with potential investors — determines the quality and terms of the capital ultimately raised. Companies that rush to market without adequate preparation often find themselves in difficult conversations with skeptical investors, unable to answer basic questions about their business, or unable to satisfy the diligence requirements of serious institutional buyers.
Key considerations
The investor targeting process is critical and often underestimated. Not all investors are equally appropriate for a given company at a given stage. The best outcome is achieved by identifying investors who are genuinely interested in your sector, stage, and growth profile, and focusing your time and energy on those who are most likely to invest on favorable terms. A focused process with 15-20 highly qualified investors typically produces better results than a broad process with 100 investors of varying interest and capacity.
What this means in practice
Process management determines results. Once the capital raise process is underway, momentum is everything. Investors make decisions based on a combination of investment merit and process dynamics — a well-run, competitive process creates urgency and improves terms. Martin's experience leading multiple capital raises, including the $115 million Adara IPO and $100+ million in cbdMD financings, has demonstrated that disciplined process management — clear timelines, consistent communication, and professional execution — consistently produces better outcomes than informal, unstructured processes.