Looks like the theme for the day is demystifying business processes. In our first breakout session, Asheesh Advani delivered six lessons for how to raise money now.
Lesson #1: People who invest more than $25,000 are impatient.
A patient investor is much better than an impatient investor. You want patient investors because they'll allow you time to keep your promise and grow your business.
Lesson #2: Develop a fundraising plan just like a business plan.
It's not fun, but it has to be done. To develop your plan make a list of prospects, plot your pitches (rework and refine), expand your prospect list and decide on a closing date for the funding round. Your success rate should be right around 25 percent; any more than that, and Advani says your prospect list is too long.
Lesson #3: Refine your kitchen table pitch.
It's much like an elevator pitch really. You want to educate, not sell. People don't invest in products, they invest in a dream. However, you have to present a tangible version of your product. Once they invest--before, even--you want to be clear about what happens if you are unable to pay back the money and provide options for both funding and repayment terms.
Lesson #4: Most businesses don't grow like a J-curve, so be careful with your forecasts.
Problem here is that most investors will want to see that J-curve growth. Handle this with care and by figuring out what factors have to be true for your business to represent the J-curve growth.
Lesson #5: Build your projections with costs first, then revenues.
The costs are actually easier to predict. If you beat your own projections in the first year, not only will your confidence go way up, so will the confidence of your investors. Make sure you update your projections quarterly.
Lesson #6: Take advantage of intermediaries--carefully!
There are lots of folks out there who make a business of connecting startups with investors. Be careful whom you trust so you don't waste your time and money. Warm referrals are the best way to get investors, so if the warm referrals aren't working, a blind introduction probably won't, either. Remember the first impression is extremely important, so it's a good idea to connect with an entrepreneur or former entrepreneur who has gone through the screening process successfully.
Kimberlee Morrison is the startup and finance channel editor for Entrepreneur.com.