Raising Pre-Revenue Angel Cash Is A PITA

[Vigilante]

I could write a book about all of the ways NOT to raise money. Having previously bootstrapped a few companies, I wanted to do this one completely differently. I know that I have something that can reach massive scale quickly, but it requires more than some fancy new business cards and a Regus virtual office.

So I set out to raise some angel money. Easier said than done. I have an ALL STAR cast (on my board of directors), a great business model. Development has been fully funded, and all of the pieces are in place. Brand is an A+ (license deal) and there are customers that are ready to buy.

So I am in dialing for dollars mode. A couple of referrals to angel investors from board members didn't pan out yet. Soliciting cash COLD by calling a whole list I received of angels has not panned out - it's not WHAT you know, it's WHO you know. I've contacted over 30 early investor funds, all with the same results. ::crickets::

So I am talking with one accelerator, and that could work if they will take me into this year's "class." Essentially they provide the angel round (enough to operate for 6 months +/-) and then they walk you through a multi-million dollar first round of financing. But, that's after they take you formally into their program.

People invest in people, not ideas. But you have to find the RIGHT investor to come in pre-revenue. I thought my all star cast would have been enough to attract the cash. It's not. I literally have one of the most impressive rosters for a startup I have ever seen, and all are willing to work for next to nothing to get it off the ground.

Most of the businesses you will read about here at the forum, including mine in the past, were bootstrappped to viability. But I am looking to create a billion dollar company, not a million dollar company. I can't do that by rubbing two nickels together.

So, I grind away until we find a way. It's NOT enjoyable. But long term, I believe in where we are going and I have to make other people believers to get the company off the ground.

 

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[Antifragile]

I could write a book about all of the ways NOT to raise money. Having previously bootstrapped a few companies, I wanted to do this one completely differently. I know that I have something that can reach massive scale quickly, but it requires more than some fancy new business cards and a Regus virtual office.

So I set out to raise some angel money. Easier said than done. I have an ALL STAR cast (on my board of directors), a great business model. Development has been fully funded, and all of the pieces are in place. Brand is an A+ (license deal) and there are customers that are ready to buy.

So I am in dialing for dollars mode. A couple of referrals to angel investors from board members didn't pan out yet. Soliciting cash COLD by calling a whole list I received of angels has not panned out - it's not WHAT you know, it's WHO you know. I've contacted over 30 early investor funds, all with the same results. ::crickets::

So I am talking with one accelerator, and that could work if they will take me into this year's "class." Essentially they provide the angel round (enough to operate for 6 months +/-) and then they walk you through a multi-million dollar first round of financing. But, that's after they take you formally into their program.

People invest in people, not ideas. But you have to find the RIGHT investor to come in pre-revenue. I thought my all star cast would have been enough to attract the cash. It's not. I literally have one of the most impressive rosters for a startup I have ever seen, and all are willing to work for next to nothing to get it off the ground.

Most of the businesses you will read about here at the forum, including mine in the past, were bootstrappped to viability. But I am looking to create a billion dollar company, not a million dollar company. I can't do that by rubbing two nickels together.

So, I grind away until we find a way. It's NOT enjoyable. But long term, I believe in where we are going and I have to make other people believers to get the company off the ground.

100% Agree - it is WHO you know. Especially for larger capital investments.

 

[Vigilante]

I was pretty nieve. I really though with the right model, the right team, the right customer, the right brand and the right timing the floodgates would open. And they still might. You hear about some of these ridiculous initial rounds. Part of the problem is we aren't looking for ENOUGH money.

You can borrow $50k from friends and family. Silicon Valley does tech raises for $80m. But if what you are looking for is more than what Uncle Charley can contribute, but less than what the next media darling commands, there's a non-sweet spot for a moderate demand on capital that seems to be no-mans land.

I will find it. But it's not nearly as easy as I thought it would be.

This is too much to crowdsource, and about the only traditional vehicle I haven't done yet is go on the speaking tour to investor conferences.

 

[Vigilante]

Maybe if it was easy everyone would do it.

 

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[TheKingOfMadrid]

People invest in people, not ideas.

Not always true, a big part of sales is being able to sell the future and a big part of taking money from other people is about talking it out of their pockets with something they want more in that moment.

If you're looking at setting up billion dollar companies then you're further in your journey than me so i'll save any pithy advice.

The only thing I would say from outside experience is make sure you're sticking with the fundamentals of selling. I've seen a lot of people with good ideas sell them in such boring ways because they believe so deeply in what they have from a technical standpoint, but your investors need to be sold on what it will do for them and the emotional connection - especially as you say you're pitching in the middle park, what excitement are you creating etc.

 

[Ronak]

It also has a lot to do with what market is "hot". If you were doing a saas, investors would be beating a path down to your door. Ok, probably not, but it's a much easier sell vs a consumer type product.

But 30 is a small number in the grand scheme of things. Are the ones you've targeted focused on your industry?

Edit: grammar

 

[Vigilante]

Great points. I also am mindful to not go full Tommy Boy! And @Ronak after 30 and crickets, I started thinking that a personal connection was what was going to get the interest returned, so I pivoted. I went 0-30 on even a return anything (changing up the message a bit to see if it was content/delivery.)

 

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[Kak]

I’ve got some ideas for our call tomorrow.

 

[Johnny boy]

Speaking to angel investors has done nothing but put a chip on my shoulder

 

[Vigilante]

Speaking to angel investors has done nothing but put a chip on my shoulder

As long as you turn that chip in to motivation

 

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[Flint]

Always great to read your posts and follow your journey, @Vigilante.

If I may add my 2¢.

Going back to fundamentals...

The need is where it all starts. Meaning: it's about them and their problems/aspirations, not us and our solutions. So the "back to basics" approach for me would be :

• Your ideal investor: Who is it that could benefit from investing and working with you? Not just in terms of $$$ ROI, but also strategically, socially, personally. Also, where are they/where do they gather?
• Their push: What makes them want to expand/take action in their current situation? What don't they have or have too much of?
• Their pull: What is it that they would value in your offer, what's in it for them (aka their "compelling reason to buy" as opposed to your "compelling reason to sell")?
• Their anxiety: What risks can they perceive in getting into business with you?
• Their inertia: What are they already used to doing/thinking and how could you be violating these patterns/habits?

I'd put myself in their shoes.

View: https://www.youtube.com/watch?v=IK7HkSp1KBI

How would I filter through 10s or 100s of random people trying to pitch to me on a regular? Seeing other investors I know and respect getting involved in a startup/scaleup would address many of the above points. Preselection is such a great due diligence mental shortcut (look no further than Theranos).

 

[Antifragile]

Businesses that are out of the box or offbeat are often too risky for banks to consider lending money. That is why you need an angel investor.

Angel investors are wealthy individuals with plenty of disposable income who want to invest in high-risk, high-reward startups. Angel investors are typically entrepreneurs themselves, and thus have a great deal of business experience to offer your startup. They understand the challenges that startups face and can be very helpful in terms of advice and support. However, they also require a serious return on their investment or they will take their money elsewhere fast.

You don't want an angel investor who will throw money at you and suddenly lose interest, leaving you stranded.

How to Approach an Angel Investor

Before approaching an angel investor, you need to clearly define your business idea. If it is still in the embryonic stage, then get your flash of inspiration down on paper; if it's already formed into a plan, then write up your executive summary. This will help you clearly communicate what your business is about and help you articulate your idea to angel investors.

You also need to have a thorough understanding of your target audience. Who is buying from you, where are they from, how old are they? If possible, create a list of contact information for them as this proof of potential customers can help convince an angel investor to invest in your startup. Additionally, you should have a good grasp of what the market landscape is like and how you will fit into it.

Last, but not least, find out who the angel investors in your region are and get in touch with them. They don't typically advertise themselves so detective work may be required.

Make sure you check out an angel investor's personal site before making contact. If they have a professional-looking site then your chances of success are much higher than if all you have is a Facebook page with three likes on it.

Make sure that the people in your network know about your business idea. Angel investors often invest in companies that they know, so make sure that the people in your network know about your business idea. The more you get the word out there, the better your chances of reaching investors.

Here is a book that had a tremendous impact on my own business needs (in raising capital), highly recommend @Vigilante

Pitch Anything: An Innovative Method for Presenting, Persuading, and Winning the Deal
https://www.amazon.ca/dp/B004H4XL7E/

 

[Private Witt]

This is too much to crowdsource, and about the only traditional vehicle I haven't done yet is go on the speaking tour to investor conferences.

Curious as what your opinion on a Reg CF that could raise up to 5 million. I know that may be under your range but what about a similar situation of someone else who has an all-star team and board, embedded in the market with active brand, revenue is very light but multiple pathways open. I remember seeing a negative thread here lately on the forum on Reg CFs with shadiness but not sure if pertains to the whole concept of Reg CFs for small ballers.

 

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[BizyDad]

I was pretty nieve. I really though with the right model, the right team, the right customer, the right brand and the right timing the floodgates would open. And they still might. You hear about some of these ridiculous initial rounds. Part of the problem is we aren't looking for ENOUGH money.

You can borrow $50k from friends and family. Silicon Valley does tech raises for $80m. But if what you are looking for is more than what Uncle Charley can contribute, but less than what the next media darling commands, there's a non-sweet spot for a moderate demand on capital that seems to be no-mans land.

I will find it. But it's not nearly as easy as I thought it would be.

This is too much to crowdsource, and about the only traditional vehicle I haven't done yet is go on the speaking tour to investor conferences.

So raising capital in the area/amount you are looking takes almost the opposite from a bootstrapper's mentality. The bootstrapper cuts the fat and trims everything to lean and mean.

The capital raiser wants to see a healthy cut for the person actually raising the dollars (commission) and the opportunity needs to be "big enough" to make it worth their taking it to their funds/connections.

It always struck me as weird, because you inflate the amount you're asking just so that you can afford to pay the guy that's actually going to do the asking for you.

It's almost like affiliate bro marketing with more zeros.

What is a healthy cut and a big enough opportunity? That also is a matter of perspective. But if you're able to get in the room, you can ask them about what kinds of structures they've recently raised capital for.

If you are getting crickets, it could be that it's a blessing. These guys might not feel like they can raise capital for you. Better to not yoke yourself to someone like that.

Or it could be that it's just not enough money in it for them to be worth it to raise the capital. Maybe take a look at that.

Keep in mind that these guys see dozens of these "great teams" every week. When I was in that industry, I was a literal nobody and I had three "deals" a week being thrown at me. I actually did look through most of them, and only one did I ever feel confident enough taking up the food chain.

I didn't want to send crap up the food chain. That's my reputation at stake. Turns out it was almost good enough to fund, but that industry wasn't for me and I left after a year.

So if you are sure you have a good deal and there is plenty of fat to feed everyone's grubby little hands, then take a look at other companies in your space.

To be clear, I don't mean direct competitors. I just mean similar profiles of companies.

Who funded them initially? Pour through their corporate paperwork and find out that data.

Find the corporate office of that location. Look at the LinkedIn profiles of the people in there. Gets to know their faces and names.

Then pull out Google maps and find the bars that are close by. What are the high end restaurants.

Make sure your materials are prepared, and stalk, err, I mean, stake out a chair at lunch and happy hour. Maybe even ask the bartender if he knows and it is people coming in ever?

Okay, maybe you're not in the same town. Maybe that approach is a little too extreme.

But if you know who your targets are, roll up your sleeves and do an old fashioned Dan Kennedy 1980's guerilla marketing style campaign going. Send some bulky mail. Follow up with phone calls. Hit them up on LinkedIn.

And craft your pitch in a simple to comprehend fashion. Since you already did your research their previous raises, a quick pitch line like, I have your next Dropbox/Stripe/insert comp they worked on here.

Going back to the LinkedIn stalking idea, how many steps separated are you from them? Is there someone that can get you an introduction and vouch for you? Or at least forward your packet to someone who can forward it on to the appropriate person?

I know a guy who got his initial funding because his target taught a class at the University of Utah. So he flew his plane to Utah to take the class...

You have to cut through the noise. There are definitely boutiques that play in the ranges you're talking about. These are just ideas to get your brain going. I've seen each one work. Of course, the conference route can work too.

One last thing. The best teams have a guy who has done this sort of thing before. Someone who speaks this language, and knows the ins and outs. Maybe can open some doors.

But just having someone on your team like that makes it easier to send your deal up the food chain. So maybe your dream team is missing a spot?

Hope that helps.

 

[Johnny boy]

As long as you turn that chip in to motivation

yeah of course. Now that it's been a couple years and it's plenty profitable I should be able to secure traditional financing.

 

[SteveO]

Years ago, I used a broker/dealer to help me raise about 10M for an apartment project. It was a game of politics for sure. We had an elaborate meet and greet with a presentation to about 40 people and dinner/drinks as well. Cost me a lot of money to put this on.

I'm not the best speaker but the project was very nice. They group loved it and went to work raising funds. The deal filled in a couple months.

I had a salesman that worked with each of the fund raisers personally. It was a lot of work getting the foot in the door.

 

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[Andy Black]

Just wondering if you can get any revenue before raising cash?

 

[Vigilante]

Just wondering if you can get any revenue before raising cash?

sure I could. But it’s exactly what I’m trying to avoid from a bootstrapping standpoint. I’m trying to do things differently than I’ve ever done them before to get results that are different than I’ve ever gotten before. This business isn’t some thing that would be easy to test in a smaller scale or to ramp up. It’s a product centric connected platform that uses Internet enabled technology, and includes a brand license. It’s somewhat of an all or nothing proposition. If it is funded it would instantly be a large company, but until that point there’s really no way to conceptually bootstrap it. The cost of the deployment of the technology and securing the brand that makes it all work from a competitive standpoint means it is very difficult to be sort of pregnant on this one. Andy I would love to talk with you about it at some point in the next couple weeks to see if you see a different angle.

I can get it going by writing a check or two but in order for it to reach the critical scale that is going to make it viable it’s going to need a couple million dollars in venture-capital financing.

 

[Vigilante]

Years ago, I used a broker/dealer to help me raise about 10M for an apartment project. It was a game of politics for sure. We had an elaborate meet and greet with a presentation to about 40 people and dinner/drinks as well. Cost me a lot of money to put this on.

I'm not the best speaker but the project was very nice. They group loved it and went to work raising funds. The deal filled in a couple months.

I had a salesman that worked with each of the fund raisers personally. It was a lot of work getting the foot in the door.

That’s one of the avenues that I haven’t pursued yet. Apparently there are brokers whose whole job is to secure the financing for a percentage. Kind of like agents.

 

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[Vigilante]

So raising capital in the area/amount you are looking takes almost the opposite from a bootstrapper's mentality. The bootstrapper cuts the fat and trims everything to lean and mean.

The capital raiser wants to see a healthy cut for the person actually raising the dollars (commission) and the opportunity needs to be "big enough" to make it worth their taking it to their funds/connections.

It always struck me as weird, because you inflate the amount you're asking just so that you can afford to pay the guy that's actually going to do the asking for you.

It's almost like affiliate bro marketing with more zeros.

What is a healthy cut and a big enough opportunity? That also is a matter of perspective. But if you're able to get in the room, you can ask them about what kinds of structures they've recently raised capital for.

If you are getting crickets, it could be that it's a blessing. These guys might not feel like they can raise capital for you. Better to not yoke yourself to someone like that.

Or it could be that it's just not enough money in it for them to be worth it to raise the capital. Maybe take a look at that.

Keep in mind that these guys see dozens of these "great teams" every week. When I was in that industry, I was a literal nobody and I had three "deals" a week being thrown at me. I actually did look through most of them, and only one did I ever feel confident enough taking up the food chain.

I didn't want to send crap up the food chain. That's my reputation at stake. Turns out it was almost good enough to fund, but that industry wasn't for me and I left after a year.

So if you are sure you have a good deal and there is plenty of fat to feed everyone's grubby little hands, then take a look at other companies in your space.

To be clear, I don't mean direct competitors. I just mean similar profiles of companies.

Who funded them initially? Pour through their corporate paperwork and find out that data.

Find the corporate office of that location. Look at the LinkedIn profiles of the people in there. Gets to know their faces and names.

Then pull out Google maps and find the bars that are close by. What are the high end restaurants.

Make sure your materials are prepared, and stalk, err, I mean, stake out a chair at lunch and happy hour. Maybe even ask the bartender if he knows and it is people coming in ever?

Okay, maybe you're not in the same town. Maybe that approach is a little too extreme.

But if you know who your targets are, roll up your sleeves and do an old fashioned Dan Kennedy 1980's guerilla marketing style campaign going. Send some bulky mail. Follow up with phone calls. Hit them up on LinkedIn.

And craft your pitch in a simple to comprehend fashion. Since you already did your research their previous raises, a quick pitch line like, I have your next Dropbox/Stripe/insert comp they worked on here.

Going back to the LinkedIn stalking idea, how many steps separated are you from them? Is there someone that can get you an introduction and vouch for you? Or at least forward your packet to someone who can forward it on to the appropriate person?

I know a guy who got his initial funding because his target taught a class at the University of Utah. So he flew his plane to Utah to take the class...

You have to cut through the noise. There are definitely boutiques that play in the ranges you're talking about. These are just ideas to get your brain going. I've seen each one work. Of course, the conference route can work too.

One last thing. The best teams have a guy who has done this sort of thing before. Someone who speaks this language, and knows the ins and outs. Maybe can open some doors.

But just having someone on your team like that makes it easier to send your deal up the food chain. So maybe your dream team is missing a spot?

Hope that helps.

Such a wonderful post. I am going to have to read through this more slowly and then execute on what you outlined here. Great post thank you.

 

[Vigilante]

Curious as what your opinion on a Reg CF that could raise up to 5 million. I know that may be under your range but what about a similar situation of someone else who has an all-star team and board, embedded in the market with active brand, revenue is very light but multiple pathways open. I remember seeing a negative thread here lately on the forum on Reg CFs with shadiness but not sure if pertains to the whole concept of Reg CFs for small ballers.

That’s outside of anything I have experience with but hopefully someone here can answer

 

[Vigilante]

Always great to read your posts and follow your journey, @Vigilante.

If I may add my 2¢.

Going back to fundamentals...

The need is where it all starts. Meaning: it's about them and their problems/aspirations, not us and our solutions. So the "back to basics" approach for me would be :

• Your ideal investor: Who is it that could benefit from investing and working with you? Not just in terms of $$$ ROI, but also strategically, socially, personally. Also, where are they/where do they gather?
• Their push: What makes them want to expand/take action in their current situation? What don't they have or have too much of?
• Their pull: What is it that they would value in your offer, what's in it for them (aka their "compelling reason to buy" as opposed to your "compelling reason to sell")?
• Their anxiety: What risks can they perceive in getting into business with you?
• Their inertia: What are they already used to doing/thinking and how could you be violating these patterns/habits?

I'd put myself in their shoes.

View: https://www.youtube.com/watch?v=IK7HkSp1KBI

How would I filter through 10s or 100s of random people trying to pitch to me on a regular? Seeing other investors I know and respect getting involved in a startup/scaleup would address many of the above points. Preselection is such a great due diligence mental shortcut (look no further than Theranos).

Love this and the Theranos example

 

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[Vigilante]

Businesses that are out of the box or offbeat are often too risky for banks to consider lending money. That is why you need an angel investor.

Angel investors are wealthy individuals with plenty of disposable income who want to invest in high-risk, high-reward startups. Angel investors are typically entrepreneurs themselves, and thus have a great deal of business experience to offer your startup. They understand the challenges that startups face and can be very helpful in terms of advice and support. However, they also require a serious return on their investment or they will take their money elsewhere fast.

You don't want an angel investor who will throw money at you and suddenly lose interest, leaving you stranded.

How to Approach an Angel Investor

Before approaching an angel investor, you need to clearly define your business idea. If it is still in the embryonic stage, then get your flash of inspiration down on paper; if it's already formed into a plan, then write up your executive summary. This will help you clearly communicate what your business is about and help you articulate your idea to angel investors.

You also need to have a thorough understanding of your target audience. Who is buying from you, where are they from, how old are they? If possible, create a list of contact information for them as this proof of potential customers can help convince an angel investor to invest in your startup. Additionally, you should have a good grasp of what the market landscape is like and how you will fit into it.

Last, but not least, find out who the angel investors in your region are and get in touch with them. They don't typically advertise themselves so detective work may be required.

Make sure you check out an angel investor's personal site before making contact. If they have a professional-looking site then your chances of success are much higher than if all you have is a Facebook page with three likes on it.

Make sure that the people in your network know about your business idea. Angel investors often invest in companies that they know, so make sure that the people in your network know about your business idea. The more you get the word out there, the better your chances of reaching investors.

Here is a book that had a tremendous impact on my own business needs (in raising capital), highly recommend @Vigilante

Pitch Anything: An Innovative Method for Presenting, Persuading, and Winning the Deal
Pitch Anything: An Innovative Method for Presenting, Persuading, and Winning the Deal eBook : Klaff, Oren: Amazon.ca: Kindle Store

Just ordered the book

 

[Vigilante]

BTW one smaller investor we were talking with was turned off for two reasons.

1. Because I was talking about recurring revenue vs. reoccurring revenue (never mind the fact that I used it in proper context, but you never know what will trigger someone)

and

2. Because I was boasting about the bench strength of the Board of Directors I assembled



I was OK with them dropping out.

 

[BizyDad]

Such a wonderful post. I am going to have to read through this more slowly and then execute on what you outlined here. Great post thank you.

No sweat. I thought of one more thing. Keep in mind, I am far from an expert on the subject. But I want to share one of the biggest mistakes I heard over and over in these pitches.

Everyone who wants to raise capital (everyone who has a business brain at least), starts by explaining the opportunity/problem being solved. They then quantify that market somehow.

So far so good.

But where they break down is so often I heard nonsense like "Imagine what kind of returns we will get with just 1% of that market".

No. No. No. If you have to rely on my imaginations then you don't know your opportunity well enough. Don't make me imagine the return. Quantify it. Tell me the plan to acquire market share. Make me believe that your plan is 1. reasonable, 2. attainable, and 3 attainable specifically by you (your team).

Know your numbers. Be able to recite them from memory, without looking at your pitch deck. If you have to refer to your pitch deck, you aren't an expert.

Know your numbers, or you'll hear a number of no's. (I feel so clever right now.)

And I'll repeat, when these guys tell you no, a lot of the times it isn't that your opportunity is bad.

In the backs of their minds, they are asking themselves if they have the sources for your capital readily available. They like easy raises that won't drag on forever, because that's how they get paid.

If you have a tech idea, and you are pitching a boutique shop that specializes in commodities capitalization, it won't matter if you have the next iPhone, you won't even get in the room. They don't want to waste time on something they know upfront they can't fund.

Remember that, if things start to get discouraging.

 

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[Andy Black]

Andy I would love to talk with you about it at some point in the next couple weeks to see if you see a different angle.

Anytime @Vigilante … just ping me and we can have a chat. Goodness knows it’s long overdue!

 

[Andy Black]

No sweat. I thought of one more thing. Keep in mind, I am far from an expert on the subject. But I want to share one of the biggest mistakes I heard over and over in these pitches.

Everyone who wants to raise capital (everyone who has a business brain at least), starts by explaining the opportunity/problem being solved. They then quantify that market somehow.

So far so good.

But where they break down is so often I heard nonsense like "Imagine what kind of returns we will get with just 1% of that market".

No. No. No. If you have to rely on my imaginations then you don't know your opportunity well enough. Don't make me imagine the return. Quantify it. Tell me the plan to acquire market share. Make me believe that your plan is 1. reasonable, 2. attainable, and 3 attainable specifically you (your team).

Know your numbers. Be able to recite them from memory, without looking at your pitch deck. If you have to refer to your pitch deck, you aren't an expert.

Know your numbers, or you'll hear a number of no's. (I feel so clever right now.)

And I'll repeat, when these guys tell you no, a lot of the times it isn't that your opportunity is bad.

In the backs of their minds, they are asking themselves if they have the sources for your capital readily available. They like easy raises that won't drag on forever, because that's how they get paid.

If you have a tech idea, and you are pitching a boutique shop that specializes in commodities capitalization, it won't matter if you have the next iPhone, you won't even get in the room. They don't want to waste time on something they know upfront they can't fund.

Remember that, if things start to get discouraging.

You mention numbers a lot @BizyDad. I think that’s correct.

I heard a line that your pitch should be a spreadsheet not a PowerPoint.

Not that I’ve ever pitched for funding, but I did work in a startup that apparently got €40m of funding over various stages. Everything was about hitting metrics and showing numbers moving in specific directions. Barely any revenue to speak of while I was their either.

 

[Kak]

Raising money, in my experience, has been totally a matter of limiting assumption.

Think about it… You have 100 little claims you make in a pitch about how everything is going to work together.

How did you come to those claims? What is your evidence that support those claims? The stronger the evidence, the less of an assumption it all becomes. From there it becomes easier to paint a picture of what the company can do, and most importantly to an investor, how they stand to make money off of it.

Support every claim with the strongest evidence you have. The cool part is that getting the evidence is cheap. It is great leadership practice as well.

I know about one of your distribution targets… and how easy it would be for you to get a meeting with them. Do it and talk about your market with them. Learn the things that interest them the most and… Boom, massive evidence of interest from a huge spoke to the wheel.

Extrapolate a process like that over every claim you make and they start to look less like assumptions and more like a foundation. The more of this you do, the cheaper the money gets too.

Remember, they’re not doing you a favor. It is their job to invest in good companies and it is your job to be a good company. Also, think bigger, there’s no reason why you can’t ask for the big bucks that all of these places seem to want to dole out. Even on a seed round, they seem to be over capitalizing everything right now. That money is available to someone, be that someone. Be worthy of it.

Don’t undercapitalize. You need and want the resources and flexibility it will afford you.

Hope this helps you, my friend, and anyone else looking to raise money.

 

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[SteveO]

That’s one of the avenues that I haven’t pursued yet. Apparently there are brokers whose whole job is to secure the financing for a percentage. Kind of like agents.

I went directly to the broker. He had about 30 agents working for him. He sat in the meetings and recommended that the team put a priority on our deal. There were probably 15 agents that represented the investors.

One thing that I failed to mention is that we had to pay for an in-depth due diligence on me and the property. That was before they would put any effort into selling it.

 

[Antifragile]

You mention numbers a lot @BizyDad. I think that’s correct.

I heard a line that your pitch should be a spreadsheet not a PowerPoint.

Not that I’ve ever pitched for funding, but I did work in a startup that apparently got €40m of funding over various stages. Everything was about hitting metrics and showing numbers moving in specific directions. Barely any revenue to speak of while I was their either.

In my personal experience the pitch success is based on 3 things:

1. People
2. Project
3. Pro-forma (Excel)

In that order. We make decisions with a croc brain and if we don't trust the presenter - the deal is dead. If we don't believe in the project - same story. But here is the thing, if you get the 1 and 2 right, 3 always works.

So I disagree with the line you quoted, Andy. Any imbecile can make excel numbers look good. All presentations look the same hockey stick roses and sunshine $billions in the future future, all alike. And guess what, 99.99% of all those projections are shit anyways. The economy will change, the situation will change - nothing will stay the same. The people will need to pivot and the project must survive and thrive.


On this forum I've been thinking how I can add value. I am not a great entrepreneur yet, I am learning sales, marketing and many other skills. But there is one thing I have been doing for a very long time and successfully - it is my THE ONE THING (referencing @SteveO post from way back) - it is putting capital together, raising money. I love being in the room and making that pitch. And it all comes full circle, for me to get excited the numbers must back me up. My process starts from #3 and moves up. The listener will see it in my body language, in my conviction if I am real or full of it.

I wanted to share this as I know many people here are often struggling with their businesses because of lack of capital. But as @Kak said on his show, it is your job as an entrepreneur to take other peoples capital and do well by them. That is how empires are built. Hope some people find this post helpful.