Your investor has pulled out.
The promised funds will not arrive
A small manufacturing business ordered materials after an investor indicated that funding was close. The investor now says it will not proceed. The owner has supplier commitments, a production deadline and no clear replacement source. Before searching for another investor, the business needs to know what is binding, what can still be changed and how long existing cash will last.
Establish what was actually agreed
Collect the term sheet, signed agreements, conditions, correspondence and any evidence of amounts already paid. Distinguish an expression of interest from an executed arrangement with outstanding conditions. Have the documents assessed before asserting that the investor must fund the business.
Keep any potential legal claim separate from the immediate cash plan. Advice that a claim may exist does not make the claimed amount available for payroll. Preserve the evidence without threatening an outcome that has not been established.
Remove unsupported funding from the forecast
Rebuild the forecast using current funds and receipts supported by evidence. Business.gov.au’s cash-flow guidance emphasises the timing of money in and out. Show the specific day or commitment where the missing investment creates a shortfall.
List orders, hiring decisions and other spending made in anticipation of the funds. Identify which commitments are already binding and which remain proposals. Ask the relevant suppliers or advisers about changes before assuming a cancelled plan removes its cost.
Compare a smaller operating plan with replacement funding
Consider whether a reduced production run, staged purchases or a delayed expansion would allow current work to continue. Calculate the customer and supplier consequences, including any costs of delay. A smaller plan needs to be workable, not simply a lower number in the budget.
If new finance is considered, assess its full cost, security and repayment requirements. A rushed loan can replace a missing investment with debt the original plan never allowed for. Do not assume another investor will accept the same valuation, timetable or conditions.
Set a decision point before cash runs out
Identify the next irreversible commitment and the information required before making it. Confirm who has authority to pause expansion, renegotiate or seek professional assistance. Keep the team working from the revised plan rather than the earlier funded version.
If the business cannot meet current obligations without an uncertain rescue, obtain qualified insolvency advice promptly. Do not let the search for a new investor delay necessary decisions about existing creditors. New funding is an option to assess, not a substitute for understanding the present position.
Rebuild the plan without the investor
Have the funding documents checked and remove unconfirmed investment from available cash.
List commitments already made, compare a smaller plan and set a decision date before the next unfunded payment.
Call CRP today about restructuring and creditor pressure when expected business funding falls through.