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02

October

Really Ready to Raise Capital for Your Small Business?

This week I started facilitating another FastTrac NYC class of about 30 entrepreneurs.

I like starting this intense seven days of training with a powerful guest speaker.  A good friend, David Kistner, was kind enough to visit the class.

What was supposed to be about 60 minute presentation ended up with me having to kick him out after 2 ½ hours.

The participants just wouldn’t let David leave.

Mainly because David was telling them the real skinny on what is going on out there on how best to grow their businesses.

And he would know.  David has raised millions of dollars for his chain of green dry cleaners, Green Apple Cleaners, one of the greenest and cost effective dry cleaners in the US.

On the topic of raising capital, in addition to the millions in outside capital David has raised, he also has put in a very large chunk of his own money.

But most entrepreneurs don’t realize the difficulty in getting funded.

We have all heard how some banks are lending, SBA loans are available, investors are investing and so on.  What these guys don’t tell you, though, is how difficult it is to actually get the money from them.

Now that I have helped four green businesses raise over $3MM for their businesses in the past 10 months, here’s my checklist to get you ready:

 

Top 10 Checklist for the Road Show (in order of importance):

  1. Passion— #1 thing investors look for is your passion for what you do.  Because they know entrepreneurs with passion will work hard at doing what they love.  You cannot fake this.  It’ll be obvious.  Stay real.
  2. Conviction— small business owners who know they will ultimately be successful are less likely to run for the hills and when things get tough.  You are more likely to keep at it until you figure it out.  And less likely to lose your investors money.
  3. Vision—That dream of where you’re taking the company.  A vision is not something designed to be achieved, but your main focus.  Microsoft’s used to be:  a computer on every desk.  An acupuncturist’s, healing humanity, Shift Group’s (my newest company), a sustainable planet transformed by entrepreneurs.
  4. Experts—who’s on your team?  How much experience do you have in what you are doing?  Investors, bankers, etc. invest in you and your team.  They would rather have an “A” team with a “B” idea than a “B” team with an “A” idea.  The “A” team is much less likely to mess it up and lose their money.
  5. 5.   Pitch— how well you present your idea to the money guys.  Practice it like crazy.  Get it down to 5-7 mins max.  Don’t feel like you have to tell them everything in that time, just enough to get them engaged.
  6. Compatibility—how well you work with your stakeholders.  Certain investors also get excited when they see a good idea with a team that is having fun together.  Exceptions to this can be VCs and banks.
  7. Personable—how much do they like you?  Are you someone they can trust and like with their money?  Are you someone who will communicate with them on a regular basis once you have their money, or will you disappear on them?
  8. 8.   Authenticity—when pitching, stick with what you know.  And be honest with what you don’t know.  Investors can read through inauthenticity a mile away.  And will never invest in someone who cannot own up to what they don’t know.
  9. 9.   Deck—have a very easy to read slide presentation.  No more that 8-10 slides with the most pertinent information.  Remember you are painting a vision and telling a story.  Entertain your audience with what they need to hear to get interested.
  10. 10.                 Plan—the executive summary should be totally baked.  Have the key standard information in it, and keep it to 2-3 pages max.  The goal:  leave them hungry for wanting more from you.

Got all this together?  Great.

Now expect it to take at least six-nine months to get your capital raised.

Because unless you’re a Steve Jobs, raising capital usually takes a huge amount of time and patience.

Especially in this economy.

For example, each investor group will most likely want to see the financials in a certain way… their way!  That usually takes quite a bit of time to address their request to “just make this simple change for us please.”

Another example, when it comes to valuation of the company.  How much is it worth and therefore how much equity do they get for their money.

For many entrepreneurs this is a real eye opener.

Through all of this, make sure you balance running your business and staying focused on raising capital.

Focused on your vision.  And the purpose of why you are creating what you are creating.

Since most entrepreneurs get a LOT of rejections, if you ever find mind starting to question what you are doing, feel free to use the mantra I’ve used successfully over the years:

“Thank you for sharing.  Now move over because I have a company to build.”

 

Action Steps for the Week:

Unless you are just approaching friends and family for money, make sure you have your Top 10 Checklist for the Road Show handled.

Focus on your team, passion and conviction.  And remember to keep a balance of raising money and growing your business.

Lastly, have fun.  Investments flow more readily to businesses that are having a blast at what they are doing.

 

Next Newsletter:  Choosing a Strategy for Raising Capital

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