Why do people use instruments like SBLC/BG or fundraising instead of approaching a investor directly?
Well many times, is not as simple as walking up to a bank and requesting a loan, there could be hundreds of different reasons, why a company or an entrepreneur. Might not have the right tools, or financial support to be able to accomplish the huge milestone of obtaining millions of dollars in funding.
Why? Maybe they dont have the following
NO credit, No network of rich people, No connections to a variety of people, NO ideas of how funding works, don't have the time.
Or countless of other reasons, why they are not able to or don't understand the fundraising process, or the process of obtaining capital. In these situations, a professional consulting team, with access to high profile invesments and financial institutions, will be a great addition to the services. Because then this person, would be able to work and utilize their expertise, to be able to complete this task.
SBLC or Standby letter of credit or bank guarantee are just a guarantee to a bank that someone will pay, at some point for the loan, it itself is not money. The way that an SBLC or BG becomes money, is when a bank approves, the bank guarantee, and then issues out capital.
If the person needs capital but they dont have the ability to purchase an sblc or close on a loan, the only option is fundraising, which is a process of which, entrepreneur and investors engage, for the purposes of doing a business deal. Which is a process that could take anywhre from 1 month to 12 months, in order to speak to the right person. Who is ready willing and able to invest.
