Raising Capital

Posted by admin | Presenting information while pitching to investors »

OK when it comes to raising capital for a business opportunity, I look at it like this.

Investors won’t offer fair prices until the risk is diminished to a point that the opportunity is about to take off. You have an application or product that has a competitive advantage, huge growth potential, some big and very happy early clients & most importantly you have proven the concept, you have proven the revenue projections through consistent sales and your competition cannot touch you because they are years behind.

In short that’s when you don’t need money so desperately. Before that you’d ask an angel investor to invest their money in your vision. All the bells and whistles aside here, no matter how the deal is pitched an angel investor will want a fair slice of the pie for taking the risk in doing so. Perhaps seasoned entrepreneurs with a few big wins on their plate might not have that much trouble securing funds – but then people who are serious and who believe in themselves unreservedly for the same reason an angel investor would (because they have done it before) would want to fund the early phases themselves anyway, to retain as much of the pie as possible.

Now, if such a person did not have access to the capital required to achieve this then I would be asking why, why don’t they have capital to invest in their own vision and ability, why should anyone else if they cant show past successes has placed them in a position where they can invest in themselves.

So raising capital is complicated, a good association to join is Tiecon.com is a good association to join and their annual conferences are amazing. I’ve been a member for a few years now and have made some great contacts amongst VC’s, angel investors and other great technical entrepreneurs through it.

My rule of the thumb: I don’t attempt to raise capital until I get the startup through phase 1 myself – minimizing the risks and putting myself in a better position to negotiate.

If looking for a network of angel investors go here.

My 10 rules for pitching for private or venture capital;

1. Keep the pitch as a high-level overview and get to the core of each point

2. Present one aspect of the plan at a time and ensure it’s understood – no need to overwhelm others with information or technical jargons. Keep it simple – the goal is to create a clear picture in their minds.

3. If using slides - use no more than 5 slides with BIG font and a few words per slide.

4. Talk to the audience not the slide show, look them in the eye and engage them. Know your stuff, if there are any questions.

5. Outline what the competition is doing and announce your opportunities strengths, threats and weaknesses against your number one competitor.

6. Be honest. You will earn more respect as a potential partner to these investors by knowing your opportunities weaknesses & what stands in the way of you succeeding than you will by promoting the blue sky.

7. Show them you know your challenges and indicate how you intend to overcome them.

8. Introduce the key people responsible for delivering success or failure (on Paper).

9. Tell them how much money you want from them and very briefly how you will utilize the funds.

10. Remember these people have been pitched to a few times a week for ten years. They don’t want to see financial models at this stage, they don’t want you to tell them how you plan to exit, they will tell you how you will exit if they are interested. It’s what they do. This pitch is to convince investors they want to take a closer look at you, its not to outlined the entire business structure.

If after slide 5 they haven’t asked you any questions and are showing you the door then don’t wait by the phone for a call. Don’t be surprised if they tell you to scrap the presentation mid way through slide 2 and start asking you questions from the get go.

Remember these guys do this for a living, they are sharp and have seen it all. Be ready to match them toe to toe, you must convince them your the expert in your field. If you cant show them something they don’t already know then your wasting their time.

They will know of a lot of weaknesses in your opportunity once you pitch it. If they think you have something to offer quite often they will attack the opportunity with the hardest hitting devil’s advocate play you have ever had come at you just to see how you handle it. If you’re still standing after the first few rounds you can get down to nuts and bolts.

If you’re not sure about the whole journey but think you have a great opportunity that deserves funding then you can also talk to mentor partners such as http://www.mentorcapitalpartners.com/

They get on board to help you navigate the path, for a fee of course.


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