» Three Critical Steps to Raising Money with Accredited Investors
Last Updated on January 22, 2020 by John Fischer
Business ownership, or at least the dream of owning one’s own business, is as American as apple pie. It is ingrained in the very fiber of a culture that dreams big and fights hard for those dreams. In fact it is so engrained inside this society that a new business idea is launched every minute, an astounding 600,000 ventures a year. When the going gets tough and the economy stutters, this statistic is the one number that has remained a constant. People like the idea of being beholden only to them selves, and it goes without saying that this trend will continue for a long time to come.
There are many challenges that come with owning a business. They are often unforeseen by the enthusiastic business starter. In what, I like to call, the “dream stage” it’s hard to imagine the rigors of ownership or the storms of financial hardship that has befallen many a small entrepreneur. The ultimate goal of financial freedom is often the very thing that sinks the dreams of small business owners, and so it is critical to raise the right amount, and type, of funding to ensure that the startup is a success. Proper planning prior to raising capital can help to ensure the ultimate success of your business venture.
Before you start SURVEYING AND ESTABLISHING PRE EXISTING RELATIONSHIPS with accredited investors here are three very important things to remember when trying to raise investment dollars.
- You and you alone have the dream of where your company can go. Investors are typically more cynical and driven by hard cold facts and numbers. For the most efficient fund raisers, convincing the investor to part with their money is not only about painting a great financial picture but also getting them to buy into the dream of what you can achieve. Paint the picture built on the corner stone of economics but rising into the clouds of endless possibility. Being enthusiastic but grounded is one of the keys to selling a dream. Once someone buys into the dream, and if you have the right financials to show that you can achieve the dream, getting an investment is a whole lot easier. Never be afraid to stand by and sell your idea.
- Go into every meeting with investors understanding that scalability is critical to any investor’s mindset. No one wants to have a projection of flat growth and listless profits, nor are people willing to be suckered by elevated numbers and unrealistic expectation. Build a performance model based on reality, one that clearly articulates how you can get from point A to point B and provide the evidence to back up your claims. Demonstrate a sound financial plan, include moderate to high growth, and above all be real about what you can accomplish. Too many entrepreneurs get caught up in their own sales pitch and forget, that for an accredited investor, it is ultimately all about the money.
- Raising money, children and companies is a team effort. It behooves founders to remember that every investor is looking at the team of people who will be managing their company with a critical eye. Having the right team in place, and being able to demonstrate how they bring value to your particular equation, is important during the investor PRESENTATION. Surrounding yourself with a successful team is critical to the company’s long term prosperity, and accredited investors are well aware of this. Don’t be afraid to take a subordinate role if you have the right leader to place at the helm – after all it will always be your company and when you are raising money, the right leader will be far more impressive than just the person with a dream.
Benjamin Franklin once said “If you want to know the value of money, go and try to borrow some”. Many entrepreneurs learn the hard way that money is very valuable to their start up. Don’t be fooled into thinking that dreams, passion, and hard work alone are enough – instead capitalize yourself appropriately, surround yourself with the right people, and sell the dream. Working with accredited investors can help you to fund your business and establish long term relationships that are strategically valuable for business growth.
We hope this article was helpful with raising money from accredited investors.