Don’t Waste Time & Embarrass Yourself
I meet with all kinds of men and women from various industries seeking to raise capital each year. Now by all kinds of people I mean dozens of entrepreneurs, would-be business owners, retiring founders, burned-out leaders, floundering senior managers, and all types of seasoned executives spanning the range of c-suite titles. Many of these capital seekers are poorly prepared.
Aside from the common aspect of seeking to raise capital, they are all grappling with scalability and execution challenges. It is within these challenges that the probability of their success with raising capital lies. Of course, their ultimate success will be determined by how the manage people and processes to scale their business model. Hence, investors and execution experts demand to know how well prepared capital seekers and their teams actually are. This goes beyond the elevator pitch and pitch deck.
This quick reference 9-Point Capital Raise Checklist gets you ready to rock and roll your business to your vision. Save time and embarrassment. These are the top things that attract investors to you.
Investors are looking for these 9 things.
- They are looking for, “the real deal,” entrepreneur
This is a transparent individual with a vibe and an idea with inspired thinking. Being realistic and reasonable are critical traits. It is someone who will give it all to manifest his or her vision. This is rare. It takes perfecting to achieve. Is it you?
- An industry they are familiar with
You do not need just anyone’s money. Focus your time matching with investors who have connection to and experience with your business or idea. You need their wisdom too. People invest in what they are comfortable with. This way you waste less time, your time and investor’s time. Plus, have better chances, and get access to their industry connections along their proven guidance
- A management team they believe in
Your background and experience are key. Also, if you do not have ample strong talent then attract and get the right people immediately. Build a strong Board of Advisers early. Teams with unproven/inexperienced people on them can be okay as long as they have provable momentum to show. Strong teams can solve problems. Problem solvers are the people to invest in.
- An idea with a large market and a competitive advantage
Define your specific segment of the market. Be vivid with defining your customer’s personas. Throwing around the total consumer spend in “the industry” is vague. Demonstrate your rich detailed insights. Get your differentiation message sharp. Compare and contrast to the competition. Focus on demonstrating consumer interest and future additional revenue streams.
- A company with momentum or traction
Ideas are easy. Execution is hard. Set several small milestones and crush them to prove you have progress. Sales are the greatest traction to show. Customer interest is great too when provable. Get into the market, gain prospect and customer feedback and learn from it. Then demonstrate you use what you learn to get stronger. Use truthful and accurate details.
- An idea that will generate cash flow
Gain confidence in your timeline for breaking even versus becoming profitable. Be an expert on your numbers. Ideas that generate cash flow inspire future capital investments because profitability can be more confidently calculated and forecasted. It’s okay to require a few years to show profitability as long as sales volumes are growing and get reinvested too.
- Existing financial performance
Clean up your financial books well ahead of time. It takes time to get ready because often accounting and operational changes are needed. Use experts only to help position numbers. Pre-revenue companies need to show realistic sales and cost projections. Financial performance is more than cash flow. Being a good steward with funds inspires trust.
- Effectiveness of your business model
A long-term vision and plan are more than an elevator pitch. The devil is in the details. The business model’s costs and structure are critical. Consistent-Repeatable-Processes are mandatory for scalability. Highlight your people and processes and prepare them to be questioned by investors too. Entrepreneurs often lack operational skills. Be prepared.
- Comprehensiveness of your revenue growth plan
You need more than a marketing plan. Focus on what is working now and show it can continue. Show scalability. Give details on the plan for branding, messaging, lead generation, CRM management, automation, digital presence, follow-up processes, sales effectiveness, and how to measure it all. Underestimated customer acquisition costs kill investor confidence.
Blow the minds of investors and experts you need on your team. Do this by being prepared combined with being able to clearly and precisely discuss your business model and capital needs. When it comes to investors, you have to be very interactive and ask them a lot of questions too. Know this, we investors are excellent at concealing our harshness, and not just because of kindness. Mainly there are two reasons for the stealth-ness. One, keeping a poker face and not revealing exactly how we judge you are part of our testing tactics. Second, we’re notoriously careful about burning bridges on potential. Meaning, that we don’t want to ruin our chances later at something we misjudged and passed on today. Therefore, get it right from the start. Only venture out to get the capital after you get your proverbial ducks in a row. Good hunting.