How to successfully Raise Capital
Are you finally at the point where you need to develop a better process to raise capital?
Every successful task requires a good process. The more difficult and time consuming a task the more essential an effective process becomes. When it comes to raising capital, this can translate to whether your company hits its goals, achieves the desired valuation. With this in mind, what can you do to improve your performance?
Setting the foundation
With our clients, we advise them based on our past success and failures. This advice is a well-constructed soup to nuts process that entrepreneurs and early stage companies process that can be followed every in every round.
Key elements we instruct on, include:
· Researching your potential investors
· Getting advice early and often
· Crating all the necessary collateral like pitch decks and executive summaries
· Nurturing relationships
· Choosing the terms
· Following up
· Closing the round
· Delivering on promises to each investor.
When planning to raise capital, it is important to understand that investors aren’t going to invest in your company without having an established and valued relationship. Equally important to understand is that not every investor is the right investor. Therefore, taking the time to build relationships is key to future success as these individuals will often take on advisory roles or board seats. With that in mind, expect that raising a round will take months in the best of times. With the global Covid19 pandemic disrupting markets and spooking investors, it can take longer. So being patient and setting appropriate expectations will help ease minds as the next market disruption can happen at any moment.
As you go down this road, you will need to treat the capital raise process like sales. Each lead requires constant nurturing and follow up in order to close. Larger deals can take up to a year so even when you’re not raising capital you should be strengthening relationships.
Remember, set appropriate expectations, be patient, and start preparing for that next round today.
When planning your process, it should be noted that there is no guarantee of success relative to your timelines, valuation, and financial benchmarks. This shouldn’t come to a surprise as every aspect of the entrepreneurial journey is riddled with roadblocks.
To that end, if you are willing to take on the advice form mentors and be humble and resilient you can get to the finish line. Willingness to adapt and change strategies will always be key tools to realize the goals set forth in your business plan and executive summary. Once again, expect unforeseen challenges like changes in the global markets to happen and be willing to do what it takes and be unreasonable when it comes to success.
When will it end?
Raising capital isn’t fun but it’s essential if you want to build growth and success. Making sure that you hold on to a positive state of mind will make a huge difference in overcoming each challenge. This is important to pass on to your team as they will be looking to you for guidance and leadership. Visualizing failure breeds apathy in those around you, whereas living future success in the moment will create a culture of resilience and tenacity.
Create a great pitch deck
Selling you vision requires a quality deck that follows a well-defined template. Without a great pitch and deck, it will communicate a weak message to investors that are inundated with deal flow. Consider the point that you are only as strong as your weakest asset. This is equally important in the quality of your team that must constantly execute despite lacking money or resources.
Don’t be the smartest person in the room
Even people at the top of their fields look to get better or gain any advantage to stay at the top. Just look at Tony Robbins and Tom Brady. They are world renowned, very successful, yet they continue to find an edge. If they’re doing it so should you. Surround yourself with coaches, and experts to remove blind spots. When it comes to raising capital, seek out those that have a track record of success and absorb all that you can. Remember, you are competing with potentially hundreds or thousands of other entrepreneurs in your space for limited investor capital.
Network! Network! Network!
We live in a noisy world full of notifications, news feeds, texts, emails etc. Therefore, knowing how to get through to investors requires a lot of follow up work and relationship building. Be creative when it comes to getting through to those key investors. Learn who they are influenced by, learn who their gatekeepers are and use every type of communication to follow up with them in an attempt to build relationships with your targets.
Knowing what you don’t know
Every entrepreneur starts off with a different composition of skills, and weaknesses. Likely, raising capital is not among your strengths. Therefore, as you learn all the things you need to know to build a successful organization, add raising capital to that list! Sure, you can go and hire an investor relations ninja. However, being prepared to fight as though your life depends on it requires being knowledgeable when it comes to communicating, negotiation, networking and follow up. Regardless of your industry, being a constant student will improve your chances of not being ignored.