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Is Your Business Ready To Be Funded? A venture capitalist and an entrepreneur who has secured funding weigh in on what you need to become funding-ready.

Opinions expressed by Entrepreneur contributors are their own.

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Mike Turner

1. Ability to Scale

According to Clive Butkow, CEO of VC firm, Kalon Venture Partners, there are many important criteria VC firms evaluate when making an investment decision, but the ability to scale is the most important.

"At Kalon Venture Partners we only invest in businesses if we believe we can make a 10X return on our investment when we exit the company. If we do not believe the business can scale, both in South Africa and globally, we will not invest," he says.

"Scalability can swing an investor valuation discussion towards a "blue sky' scenario, presenting an endless opportunity for revenue multiples on an initial capital cost-base," agrees Benji Coetzee, founder and CEO of EmptyTrips.

"However, unless the potential is paired with execution capability it remains irrelevant," she warns. "As a founder you need the perseverance and commitment to prove that your product will be scalable. In other words, you need to demonstrate your capability to replicate the offering to unlock upside, clients and product growth."

2. Founder's Mindset

"The founders and CEOs of businesses are the visionaries. They are the fuel in the engine and the Lieutenant General on the front line fighting fires. A founder's attitude, resilience and ability to rally their troops is therefore paramount," says Benji.

"Before a company can scale it needs to go through painful growing pains. The product evolves, customer orientation flips, the team matures and competition increases. To navigate this changing multi-faceted journey, the CEO is critical in the fight. Founders create the strategy, rally the army and lead the effort, in both the tough times and the victorious ones. Without a good fight-plan, and consistent implementation of it toward the objective, the company cannot scale."

Clive agrees."In my experience, what got you here will not necessarily get you there. Meaning the skills that helped you build a R10 million business are not the same required to build a R100 million business. Some founders either have the skills or are able to re-skill themselves and take the business to the next level, while others can't. Sometimes the founder needs to be replaced with a professional CEO that can scale the business. This does not imply the founder leaves, but rather that they take on a new role that is more aligned with their strengths."

3. Take Action

Clive doesn't believe it's right or wrong to scale a business – instead, it comes down to what the founder wants. "Many founders are happy to grow their businesses organically and maybe only build a lifestyle business," he says.

"Other founders want to build a business that will change the world. We call these exponential entrepreneurs. The key to scaling a business, in my experience, is having the right skillset, as well as a mindset that embraces a "can do' attitude and has a bias for action."

"I call it AA or Attitude of Abundance," says Benji. "Founders are the alphas. They need to lead, aspire to and believe in scale."

Matt Brown - Digital Kungfu

CEO: Digital Kungfu

Matt Brown is the Chief Excitement Officer (CEO) of Digital Kungfu, a storytelling production company that specialises in helping technology businesses generate leads, market their software products/service and build their brands. He is also the founder of the Matt Brown Show, South Africa’s favourite podcast for entrepreneurs. 
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