What Not To Do When Seeking to Raise Money
What a fantastic question: how to get your deal in front of the investor and what not to do. Everybody always talks to you about what to do and so forth. But I'm going to talk to you about what not to do from an investor's standpoint.
There are nine items I'd like to take care of at this point.
Number one, an inadequate team. I believe a quality team is probably the single most important factor in looking at a young company. So, surround yourself with people smarter than you.
Number two, is the company crowded or in a noisy market space? Markets have a lot of players are difficult even if the innovation is head and shoulders above the rest. If it's a consumer market, you'll have trouble getting your message to stand out in this economic environment.
Entrepreneur naivete. This ranges from plans that had no real plan from going to market. Their thoughts were just announced, and the customers will come. Unrealistic expectations with no real through put.
Four, plans with no concise explanation. It drives us crazy. A plan gets about 30 seconds to catch my attention or the investors attention. If the first few sentences aren't compelling for me to keep reading, I won't.
Five, plans that require too much total money. Angeles typically don't want to be the first quarter million dollars into a deal that's gonna take $10- or $20-million to achieve a profit.
Evaluation. We've covered a lot about evaluation before, but what we often ignore is absurd evaluations. Early in our discussion of a company, a plan will fail if it's ten times what it ought to be.
Seven, lack of barriers to entry to intellectual property. A star team can sell a plan that's really based on execution. But ordinary mortals like us have to show that they can keep others out of that space.
Eight, problematic deals. Plans that don't fit the angels/VC mold of plans with unusual deal structures, the investors will tell you how they want to invest, typically.
And finally, don't use a broker. Investors don't like paying brokers. They'd rather have the money going into the company, and too many of the brokers and companies at this stage are not properly licensed which casts a real pall on the whole transaction.
So, prepare yourself to navigate the capital or raising minefield with some common sense and the help of professionals you'll find at The Capital Match Point.
