How to Raise Funds for Your Business Start Up
If you want to be successful in raising capital this year, you’re probably gonna want to know about the NEW MODEL for raising capital.
The NEW MODEL ain’t your grampa’s fund raise. It’s not the 1960 anymore. We don’t use typewriters anymore, and we sure as hell don’t expect a 100-page business plan to actually get read by investors.
Some people are stuck in the past, when it took 9-12 months to raise money for a growing business.
This isn’t 1960, so WAKE UP!
We have the tech to send anyone on the planet a message in seconds. So why is it that most people are still following grampa’s fund raise rules, and just drifting along with their cap raise, wasting 9-12 months on roadshows & investor meetings, when it can be done in <4 months?
There’s nothing wrong with the old model. Slow and steady wins the race right?
Not if your competitor beat you to the punch because you couldn’t raise the $10M you needed to scale.
So let’s talk about the NEW MODEL.
3 Pillars to the NEW MODEL. We call them the 3 P’s: Preparation, Pitch and Process. Miss any of them and you’re back to a capraise that takes 9 months+.
I've used it for a long time. I'm still running the same stuff, and the numbers hold true all the way for myself and my clients.
The 3 Pillars are rinse and repeat, and they’re proven.
They’re what let you stop worrying about booking new meetings or struggling to put together a solid pitch, and just focus on getting those investors over the line with this model and focus on growing your business.
Don’t worry - I’m guilty too. When I was a rookie I didn’t know any better and I tried the Old Method (read: “Hopes & Prayers”) for 9 months and all it got me was a bunch of sleepless nights and headaches, wondering when I was finally going to get an investor to actually write me a check.
Nothing was working no matter what I tried…
I was trying to raise $5 million for a business with literally, sustainable 50% net marginsand ridiculous barriers to entry. I’ve seen a lot and honestly this was a pretty f**king awesome business. But after months and months of eating ramen noodles on the floor night after night the best I got was a couple soft commitments for not even half our goal…
Needless to say, everybody was on the fence, nothing was working...
Then one day, I decided to make a shift….
I found myself negotiating against a massive $200 million a year counterparty, basically invading without an army because we had literally no money to do this deal…
Things weren’t looking bright there either because we needed millions of dollars to fund the deal, until…
I finally took massive, strategic action.
I didn’t just go take action looking for more investors. I called the guys we had spoken with about asset finance. Basically hard-money lenders at ridiculous rates that we’d never take. But I got a term sheet out of them for half of what we needed in debt. Then I picked up the phone and called the CEO, pitching him and asking him why he wouldn’t just invest – considering we now had a debt package on the table.
I had to swallow my fears and push my confidence to the absolute limit at that time and position our business as an ideal investment for this CEO...
Well that action finally got me a soft commitment from the CEO...which then turned into a hard commitment! Then I went back to everyone who was on the fence & closed them one by one – because now we no longer needed them… and we had momentum! And ultimately we never even had to take the debt!
The result? Cash in the bank!
So many people think I just got lucky when I was starting out, but they don’t see the sleepless nights, the countless rejections, or the fear of calling up investors that I struggled with until finally landing my first hard commitment.
That specific action helped launch my first success and helped me understand the psychology on how to position myself, my companies, my visions to potential investors, and most importantly! To completely streamline the capraise process and make it work for me!
Here’s what makes the new model so successful: momentum. Once you get momentum, just like I did & what I teach my clients to do… you can rinse and repeat too.
Once you have the right messaging, in the right deck, with the right angle, and the right forward momentum toward the close, the sky is literally the limit because you already know how to get investors to pull out their checkbooks.
You know what the investors are thinking, you know what’s gonna play and you’re anticipating their questions and hesitations, and just crushing it while you guide them along to the close.
I’ll be honest with you...the only reason I’m in business is because my clients just keep getting results with how I teach them to present themselves in front of investors.
Let’s go back to the 3 Pillars: Preparation, Pitch and Process.
Preparation is what you do before you approach investors. It’s not just “create the deck & make a list of investors” – it’s getting yourself 100% educated on the next steps, because in order to be effective you need to know the road, and know what to do at every turn. Preparation is also about setting yourself up so that you’ve done everything you can possibly do to increase your value before you even enter the infamous investor-pitch conference room. Making it so that you have the absolute best possible chance to totally crush it in your pitch.
Next is Pitch. This is what goes on in your cold-call process, warm intros & the actual pitch itself. Your delivery, your story, your interaction, your timing, your focus – it’s all critical. You have to nail it. And when you have this system of generating investor meetings, and in what order, and then how to run your pitch – well it’s just a matter of time before you move them along toward the close.
And most importantly is Process. Nobody in the market is teaching this stuff.
This is the real secret sauce, because this is where everybody fails.
Because the rainmakers just keep making rain & magicians don’t ever give up their secrets except to other magicians. Well here I’m telling you this is where the magic happens. By knowing the little tips & tricks, you’re keeping investors on that straight line to the close.
Think about it: you put together a great deck, then you had a great pitch… and then what?
If you remember the 90s you remember Johnny Tsunami:
“You’re letting the hill work you. You gottawork the HILL, baby!” -Johnny Tsunami
It means that someone’s in control of the closing process, it’s either you or them.
Me personally, I’d rather always be in control of my own business’s fate, timeline, process & interaction. And I bet you do too.
Do you want some investor dictating terms? Intentionally delaying you so he can get a better deal out of you? What does that say about how they’re going to act once they’re an actual shareholder? Not a good way to start a relationship.
So in the process, YOU gotta be in control.
It was YOU who started the f**king company, and now because somebody shows up with some money, all of a sudden you’re ready to be someone else’s bitch? I don’t think so.
So you have to run a capital raise like you run your business: efficient & in control at all times.
Which means you gotta know the process better than they do, know the tricks better than they do, and know how to make a deal better than they do.
So let’s talk about a couple of things we teach for each of the Pillars...
In Preparation, Number one is that message always wins.
Sure, a beautiful pitch deck is going to be nice to look at, but not if it's just lipstick on a pig. You can get as sexy as you want - and in certain cases you absolutely should (consumer goods or luxury) - but in the end your message always wins because that’s what investors care most about...end of story.
You can have a pitch written on a napkin & raise $10 million. I HAVE SEEN IT HAPPEN. It is ALL about the message!
You gotta define your message clearly and ensure that your potential investors know and understand that message inside and out way before you even finish your presentation.
Okay Secret Number two, about Pitch: Let me set the stage first.
So you just delivered your pitch, it was pretty good, investor looks like they’re getting it, you got all the way through your deck and now flip to the last slide, and you show the final page of your deck which says: “Thank You – Any Questions”
So many people are still in this “pretty please” mindset and think this is a strong way to close a presentation. This is exactly what the old method preaches. And you know what, they’re right, because they’re delivering presentations not pitches. A pitch closes. A presentation informs. So they follow the old method & water down the potency of their pitch as the very last thing an investor hears before they start asking questions. Just totally deflate the balloon you just spent 10 minutes blowing up.
Think about it - what response are you trying to get when you have the glorious opportunity to stand in front of someone who has the power to write you a multimillion dollar check:
A) “Oh, that’s an interesting concept. Thanks for telling me about it.” OR
B) “Holy shit this guy’s business is gonna get funded every day of the week and twice on Sunday. I gotta get in this, and call up Bobby, he’s gonna want a piece of the action too”
People who follow the new model do not end their pitch with a "Thank You - Any Questions"... They just close the deal.
If by the end of the pitch you did your job right then the investors better be thanking YOU! (and that's what we teach you - how to get them begging to get in).
When you take these concepts to heart & put them into action in your pitch message, then instead of getting the “Thanks that was interesting” you’ll start getting the “Wow that was awesome, how do we get in this”.
And this is what makes the difference between a Rainmaker and a failure.
So now we come to Pillar #3 – Process... it’s a really controversial one!
But as you know I have strong views, loosely held, and I’m going to let them rip on you (because, like you, all I care about is GETTING RESULTS for people I work with!). But it’s a long one so we’re going to have to save it for another day.
To learn more about what we do, check out www.speakinvestor.com/case-study