The Beginner’s Guide to Raising Capital for Your Childcare Business

Your childcare center is an investable business. As a business, there’s opportunities to secure funding for your center in order to grow and thrive. If you’re new to the investment world, this article will help you navigate how to raise capital and funding for your childcare centers. 

We’ll discuss prospecting, finding investors, different investment terms, and ways to succeed when fundraising. By understanding how to navigate the fundraising process, your will be able to gain capital and secure funding for your childcare business.  

Preparing to Fundraise

There’s a few things to keep in mind when you’re getting ready to raise money for your business.

• Create a polished slide deck

Your slide deck will be a presentation that outlines important information about your business. Include why you started, your mission, competitors, why you’re investible, pertinent financial information, and your roadmap for the future. This will help investors understand why they should put money into your centers.

• Understand how investors will get their money back

When someone invests in your business, they’re planning to recoup their money and then some. Typically, an investor is given equity in your business in the form of shares. You can determine how many shares or how much of the business an investor will own based on the money they put in. With this ownership comes terms and conditions from investors. This could mean they’re involved in certain decisions, how the money is spent, who is hired, etc. These terms and conditions will be outlined in a document called a term sheet.

Finding the Right Investors

There’s a number of different networks to get investments from. Start with your existing network then begin building a list of potential investors.

• Existing network

Think of your friends, family, and social media connections. Your personal network likely already knows and trusts your business and therefore will be more likely to invest.

• Databases

There are databases available that outline potential investors specific to your industry. Check out Finta, SignalNFX, Crunchbase, PitchBook.

• Creating a list

Once you outline who your potential investors might be create a list based on important contact information, possible investment amount, level of equity, etc. 

Actively Fundraising

Once you understand the basics of capital raising, create your pitch deck, and find your investors, you can start the process of raising money. Here are some tips to follow when beginning to talk to potential investors about your business:

1. Don’t ask for money right away
2. Ask if your company is investable
3. Ask for feedback on your pitch deck
4. Ask who else you should be talking to
5. Ask what milestones you should be focused on

Tools to Help You Succeed

Managing investments, shares, equity, etc. can be a difficult process. There are softwares available to help you manage capitalization, such as Carta

This software will help you:

• Issue electronic shares
• Automate their approval
• Track capitalization
• Give shareholders insight into what they own

The investment world can be overwhelming and hard to understand at times. We hope this Beginners’ Guide to Raising Capital for Your Childcare Business gave you some insight into how to get started.

Kangarootime is the leading all-in-one childcare management software for daycares and preschools. With billing and invoicing capabilities, parent communication and staff management tools and classroom automation, Kangarootime helps childcare centers grow and scale. To learn more about optimizing your center with Kangarootime, visit kangarootime.com