The 5 Basics of Raising Money Every Entrepreneur Must Know
- August 14, 2016
- Posted by: admin
- Category: Business & Digital Marketing Tips
Recently while interviewing the CEO of one of the leading digital marketing companies in Pune once again I learnt the same thing that the money in your box isn’t responsible for a triumphant business but the tricks in your mind, for the money keeps running after if you know the right tricks.
The conversation on the venture capital suddenly embarked upon a guy’s discussion (No Name calling! Sorry!), who recently got quite a big funding from an overseas company and the idea was that not even some years but some months ago he used to visit our all-so-successful internet marketer to gain some wisdom on marketing. I cannot predict what was running in his mind while he said so but had I been at his place I would certainly have felt bad because I (Role play him!) was putting all my efforts in my business and was considerably successful too but at the end of the day that was a considerably successful and not an overnight BIG success like that of this all-so-new-chap!
Anyways! Let’s come to the point! I mean this article has been created with an intention of helping you with some tricks on raising money based on the traits of such people we did a research on in past few months! By such people I mean by those who are champs at getting the Venture Capital (VC). Though it was a little tough task to gather information of how people deal with people but somehow we could for you and even us! I mean who would not love the VC! Especially, if you are not in service business and your business requires a long term investment, you certainly need a VC.
So, let’s have a quick look to these five tricks (of course tricks, for even a smile can be a trick in business :-D) to get the venture capital easily.
Not all those who speak can communicate!
Barley putting across the idea doesn’t mean you are communicating the message that you wanted the other person to know & work upon. While what you speak are words communication is the bottom-line you wanted to achieve from those words! Now, talking about the people who give you money, let me repeat the words that everyone have been saying is they are not sitting to simply welcome you with the venture capital you were looking for. You need to get that from them through the wise words and the way of telling these wise words! 🙂
Of course! Nobody as far as I think would straight away say I need money and will you be giving that to me or not! But even if you have a begging gesture that won’t help! Sorry for the PJ! 😀 I mean being overly sweet isn’t the trick as well! Be tactful! Act like a gentleman! Earn the respect first! Before knocking their door send a courteous emailer asking for an appointment telling the value proposition of your company in short and how is that going to help you & your Venture capitalist! Follow up with them and nurture them like you would nurture your leads! While everything you do always keep the idea of getting the vc at the back of your head.
Meet the VCs, talk to them and I won’t say tell them but put into their mind very wisely as to what you do, why you do is something very obvious (more or less the money as long as you aren’t a Social worker or an NGO) and as I said before how the venture capitalist can get benefited by investing in your business.
Be patient and plan your business according to the Capital cycle!
It’s not that you have raised money once and that’s raised forever! You need to work smart in the direction of raising money again no matter whether you have raised it once or twice, for even your business is ever lasting! I mean if you want that to! There could be a possibility that you don’t require to raise money the third time but at the same time you might need to raise it over and over again! You always need to keep in mind while raising money that there is a specific cycle for the capital whether it is the first money you have raised or the second …at times may be every capital you raise. So, don’t use up all in a rush and run out of money before raising it the second time. Plan your things and run the business accordingly. You just can’t approach the venture capitalist saying oh my God! I used all of that by mistake and that I need more as I am running out of it to run the business! Its takes long to raise the money so keep working toward the process!
How you get rewarded depends on how you approach!
Let’s talk about you! Have you observed how you treat people differently when they approach you differently! This is what! VCs, angels & financiers are no different no matter whether they are carrying funds for you! End of the day they are human beings and they want to deal with human beings than robots! So, simply sending a business plan won’t work if you are looking to raise money for your business! Like I said before send a very courteous email or connect with then on LinkedIn and then send them an email asking for a meeting with a short description of your business along with how investing in your business can benefit the venture capitalist!
The one good idea is to start the conversation with something that may talk about business than money! Very prudently, you can ask them that you want to gain some wisdom from them, learn how they have reached this success & so on. Trust me! They are not just going to respect you & the way you approached them but are going welcome you, for they love meeting people who talk business more than money!
Be frank while dealing about the equity!
Why they say everyone can not run a business! This is the idea behind the saying that I am going to talk about! A true businessman will never make it an ego war and is very frank about the dealings! This doesn’t mean they work on who-gets-what upfront but at the back of the mind they don’t overlook who-gets-what as well, just that they don’t pretend and are very polite & prudent at the dealings!
Remember! Pitching for the capital you are looking for is always better than pitching for 10 times what you are looking for as bargain rarely happen while raising money! You anyway have to prove your point as well! Keep it to what you require and keep it easy! Now, at the same time be frank about dealing & finalizing the percentage of the profit the VC is looking for! Think practical and act practical just use the right words! Remember we talked earlier in the article as to how crucial your communication is!
Reveal your domain expertise well!
Like every common man respects the knowledge, expertise and authority on a subject, Venture capitalist do as well. They aren’t aliens and that you aren’t an alien! So, making you understand what an investor will be wanting from you isn’t difficult! Like you care for domain expertise they care for it as well! End of the day, its knowledge & expertise that helps us tackle the adverse situation if we encounter one. Before they give you the money they will of course make sure they are giving it in the right hands!
Display your domain expertise well! It could be through the content you share across various online or may be offline platforms including blogs, social media etc. share the knowledge you possess well and spread it across! The one who will give you money would for sure be expecting you to be an expert on the subject. Moreover, if you are an approach-that-person for that domain than you don’t need to run after the VCs rather they will be coming after you.
Wish you all luck in raising the money you want! 🙂