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Regarding equity and debt funding, capital advisors and consultants ask very distinct and direct questions to their clients. For example; “How much capital do you need?” or What type of sales have you achieved?”  These are fantastic questions but still there is a vital question that must be answered in order to determine the financing viability of the adventure, which is “What are your strategic relationships and how strong are they?"

 

The strategic relationships are critical to growing companies and they offer potential and provide viral growth opportunities that investors are interested in obtaining and financing. In several ways, quality strategic relationships, can aid a company in many areas as well as facilitating stronger sales and channels.

 

Strong alliances have the unique ability of impressing an investor throughout the sales chain. Because of this fact, it is strongly suggested that a client needs to locate potential strategic relationships that can provide several factors.  First, the relationship will need to have the potential of developing new sales channels.  Secondly, the alliance will need to minimize the financial requirements placed on the company thereby increasing the financial flexibility of the company. Next, can the relationship assist in exploring new customer bases?  Last item, the alliance will need to instantly provide credibility to the business as a whole.  The relationship will need to ensure the opportunity to a larger operational advantage that would not feasible without the relationship.

 

Private and institutional investors along with investment banks, look for companies that can foster high levels of viral growth.  With this growth, the company has the opportunity to achieve positive economic factors coupled with overall intrinsic value of the organization.  Positive strategic alliances can offer assistances in growing a company without investing heavily in the relationship, which in turn, leads to a higher return.

 

In many cases investment banks and institutional investors are so fixated on the quality of your strategic relationships that they will search to find relationships that can justify them making an investment in your company.

 

To determine the value of a strategic alliance, it is vital to define the crucial needs of the company.  For instance, a pharmaceutical company would require a relationship with a major distributor rather than focusing on a relationship in a niche market.  Alliances are available in every field in every market, locating a productive relationship is the key. A company that is successful in cultivating a sustainable positive alliance will immensely increase the value of the organization. 

 

I advise those companies that are interested in acquiring funding either from debt institutions or from institutional investors to really concentrate on cultivating sustainable strategic alliances.  If you can do this then you will greatly increase the value of your company; both to yourself and to your investors.

 

 

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