Tuesday, June 8, 2010

Capex is impossible without a predictable payout.

What makes financing any venture difficult is the ROI (return on investment). Bankers, lenders, investors only care about one thing. When will they get their money back and how much profit do they stand to make from this investment. Capital Expenditure (Capex) is predicated on this notion of returning the original investment and providing future cash flow. If you cannot provide a satisfactory answer to that question, the funding will not be forthcoming.

Proformas are fabrication and everyone goes along with delusion if the storytelling connects. The story needs to provide a mechanism that the stakeholders feels comfortable with.The story needs to resonate a predictable payout.

Funding approved!