Starting note: Growing your company through revenue from customers is 100x better than capital raising. As the saying goes, “No bird soars too high if it soars with it’s own wings”
But… some companies need capital at some point to grow through a certain point.
My top tips:
- Know why you are capital raising. Don’t do it because that’s what everyone does. Why does your business need capital? Why are you selling some of your business for some money?
- If you are raising because the business is too risky for you to invest your own money (mortgage your house) or earn less money, then it probably is too risky for anyone else too.
- You get what you earn. If you’ve created a great team, solid product and evidence that plenty of customers want it, you’ll get good money from good investors on good terms. If not, you won’t.
- Don’t cry “There is not enough capital available”. Companies in markets with less capital than you and worse businesses than yours will raise or do without.
- Be prepared. Capital raising is important and you will fail or do poorly if you are not prepared.
- Be prepared to work. Capital raising is usually hard work. Consider it a full time job until all the money is in the bank.
- Who’s flying the plane? While you’re capital raising, who is running the business? Worse thing for capital raising (and the business) is to have the business start flailing because you’re working hard to bring in money.
- Investing is done mostly on relationships. Less than 10% of the time investment is done based on an amazing pitch and quick decision. Otherwise, relationships take time so be prepared to invest before you get invested. See slide deck below and mailing list method. I’ve helped 10+ companies use this to raise $10m+ seed money.
- Follow up is key. You are being evaluated on your ability to run and grow a big business. Small signals, like being late or not following up, will be taken as how you run your business and will turn some off.
- Pressure. Once you’ve done all the work, there is always some pressure to invest. Hopefully lots of investment offers but also a time deadline.
Here is an old slide deck with a some of my thoughts and tools. It also has some bonus points at the end on pitching:
Here is the Universal Pitch Deck we made up at Pollenizer as an easy start. I think it still answers most of what you need to talk about:
Text by Mick Liubinskas