Well, the good news (and the bad news) is that there really are no tricks to raising investment capital for your business. Raising capital requires preparation, persistence and diligence. Before you begin, make sure that you are well organized. Once you start meeting with investors you need to be on the ball and respond quickly to their requests and questions. If you’ve got a solid business plan and tested prototype there are only a few simple things you need to do to stand out above the crowd.
How to Raise Investment Capital
1. Do your research and narrow the field. Make sure you are meeting with the right investors. Spend time and effort to research the investors that are focused within your industry and at your stage. Google search and LinkedIn can be your friends when identifying those investors and figuring out how you are connected to them. Ask your network for introductions to those people who may be target investors. The strategy of pitching often and pitching everyone is a good one for general networking, but make sure you’re ready to pitch flawlessly to that specific investor you’re looking for.
2. Listen carefully. You should note all of the feedback you get and be sure to give it the thought and the response it deserves. Objections and criticisms can be very helpful in sharpening your presentation and alerting you to any weaknesses in your plan. Listen carefully to what investors are asking for and provide that info to them. There is often a level of subtlety involved. Investors are looking for keen listeners, someone who can really hear what it is they are asking about. They want someone who can understand all of the implications, and connect the dots. Oftentimes, it is less about what you say then what you hear, and then how you respond. Some people can become so focused on their outgoing message that they seem unable to listen or to have a dialogue. You should know your material well enough to be able to relax and engage in a conversation.
3. Be timely and responsive. This cannot be overstated. Investors are skittish enough and are very sensitive to any sign of unreliability. Your dealings with them will show how thoughtfully and intentionally you will handle your business—and their money. An investor’s time is money, so handle it just as carefully.
4. Build relationships. People give money to someone they have a relationship with. Though your relationship with an investor will be a professional one, it is still a relationship, and one of profound trust. To earn investment capital, you first need to earn the trust of investors.
5. Demonstrate. Set goals and accomplish them. Do what you say you’re going to do. The most important thing to demonstrate, the uber-coolness of your product aside, is how you are going to make money. Even in the early stages you should have some idea about this. If you can’t demonstrate how you’re going to be making money, you have some more work to do.
And there you have it. Our clients who have been successful at raising venture money all tell us the same thing: Be persistent and consistent. Stay on the radar, but don’t be a nuisance and don’t burn any bridges. Be respectful, polite and cultivate all of your contacts. Raising money requires a strategic, concentrated effort. You will very shortly come to know the investment landscape as well as your market.
EGFS has a lot of experience working with clients during their fundraising process. Feel free to contact us with questions.
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