Business means having the means. Lastly, you’ll fund your product or service by finding the right investors.
PACE: Slow and Steady: 8 weeks | Moderate: 6 weeks | Accelerated: 4 weeks
From friends and family, to angels, to crowd funding, to venture capitalists, to to bank loans, the range of funding opportunities is vast, and daunting and, no matter the opportunity, challenging to secure.
As this is your first solicitation for funding, you will need to be ready for feedback, for rejection, and for the pivot.
You will know you have hit your target when you are getting consistent feedback, and are driving interest in your business from several different sources.
Know what you want, know what you are willing to give. State that. You will get feedback to which you will necessarily respond if you believe in your vision for your company. This means you need to understand how your business makes and expends money, when your business is expected to return its investment, how and when your business will grow and scale, and whether you believe your business will be sold or if you will go public, or if you will just run it forever.
As you get feedback from potential investors, you will reiterate some of your plans, perhaps all of your plans, failing, rising, pivoting, failing again, rising again, and living the Starter life.
Preparation is key. Know your numbers. Know your terminology. Know your story. Know what is powerful about your company. Be informed on your strengths and challenges. Know your competitors. Do you have a marketing plan?
Make your presentation memorable! Tell your unique story. Now is the time to rehearse and rehearse! Rehearse for your advisors, rehearse for your friends. If you can, get a dry run with an investor who can give you feedback. Bring all the skills and knowledge, gleaned over the 6 steps to this moment.
Ensure that your materials from Build It are clear, accurately represent your company, and are professionally presented. Check back in with your legal and finance team.
Use the internet: research angel networks interested in businesses like yours. Find crowdfunding campaigns that were successful for businesses like yours. Use your network to get introductions to individual investors who are interested in investing in businesses like yours.
What kind of funding are you seeking at this time? Do you feel prepared to advocate for it? Do you feel ready to take the long walk with this business no matter the outcome of this first meeting? Are you and your partners in sync with your company’s mission, purpose and growth? Are you and your partners’ goals aligned? What’s working? What’s missing? What value are you bringing to the investor? Are you “knocking with your elbows?” I.E. ARE YOU BRINGING VALUE TO YOUR INVESTORS BEYOND FINANCIAL RETURN?
STEP SIX ROLE MODELS
Visual Aids, Power Point Documents, Pro Forma Spread Sheets, Music, Video, Prototypes, Testimonials, Proof of Concept examples.
Angel Investor: an investor part of a network of angels investing in early stage companies
Convertible Note: a low risk type of debt for early investment that converts into equity when a company gets fully capitalized.
Friends and Family: the first people you approach for investment (usually with a convertible note)
Series Seed: the very first round of funding after a Convertible Note, that includes outreach to individual and angel investors. The average contribution to a seed investment is approximately $50,000.
Series A, B, C: These are more formal rounds of investment wherein you can begin to take institutional funds from venture and family offices.
Venture: The most expensive, institutional investment you will take for your company.
Crowd funding: popular online funding (think kickstarter)
Revenue: The money your company makes
Expenses: The money your company spends
Preferred Return: This investment is paid back first, before other investment is paid back.
Units: Equity broken into equal shares or units of stock
Strategic Investment: an investment by a person or entity seeking a majority share of your company
Oversight: How decisions are made according to your Operating Agreement
Board of Advisors: The people who make the big decisions for your company (usually fiduciary and planning)
Subscription Documents: the investment papers required for the Series A, B, AND C
Managing Members: The co-founders and owners of a company organized as an LLC.