I wanna start with my favorite quote (updated just a little): “At the moment of commitment, the Universe conspires to make it happen.”
― Johann Wolfgang von Goethe
Raising capital is a very serious undertaking. The mere act of raising capital turns any business model into a much more complex one, and reduces your overall chance of success.
- Be ready to commit the time and resources to complete and document your business plans.
- Take the time to learn what you can and can’t say, and what you must do and what you should not do to stay compliant with securities laws. Hone your communication skills and commit the time to develop your offering documents and pursue investors.
- Be prepared – both mentally and financially – to sell a percentage of your business.
Experience has shown that the success rate of those raising $1,000,000 or more the very first time is less than 5%. And more fun facts to share – the odds of raising $5,000,000 or more from venture capital funds, building a profitable business, and then selling it at a price that gives your investors a great return is probably about 1 in 10,000. That’s right…for every Steve Jobs, Bill Gates, and Mark Zuckerberg out there, there are 9,999 other very bright and hardworking people who tried for a home run and struck out.
Focus your efforts and resources to get your business into revenue producing activities as quickly as possible. Help your whole team to adopt a relentless pursuit of financial stability, consistently setting the right examples in everything you do.
If possible, consider using your own funds or money from your family and friends, constantly working towards financial stability. If you decide it’s worth it to expend the effort and undertake the risk of raising capital, then…
…Raise Money In Stages
If you have to raise money, then do it in stages. Figure out how much you’ll need to raise to reach your first milestone, add a little extra, and raise that amount. Shift your focus into execution and implementation mode and reach the first milestone as quickly as possible. Then work on raising capital for the second milestone, and so on.
The more progress you can demonstrate, the better you are at setting goals and achieving them, the more attractive you will be to investors down the road.
It’s important that you have the right pieces in place and that you’re working with people who can help you determine exactly how much money is needed, what it will be used for, and what percentage of your company you should be selling.
Stay safe, and more tips coming…