Get All Access for $5/mo

Six Lessons for Raising Money Now

By Kimberlee Morrison

Opinions expressed by Entrepreneur contributors are their own.

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.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Side Hustle He Started in His College Apartment Turned Into a $70,000-a-Month Income Stream — Then Earned Nearly $2 Million Last Year

Kyle Morrand and his college roommates loved playing retro video games — and the pastime would help launch his career.

Leadership

Overnight Success as a Startup Is Unrealistic — Embrace the Uncertainty and Try This Instead.

The startup norm of "move fast and break things" is short-sighted. Here is why being patient will serve your business in the long run.

Travel

Reduce Business and Personal Airfare Costs by Saving Big with Matt's Flights

This week only, you can get a lifetime subscription for just $80.

Money & Finance

How Top Financial Leaders Excel with Increasing Responsibilities

Hear from CFO Leadership Council founder and president Jack McCullough for tactical lessons from some of the world's best CFOs.

Business News

'I've Never Regretted Leaving the Corporate World Behind': This Former Lawyer Now Makes Six Figures on YouTube — Here's How

Here are the secrets to starting and growing a successful YouTube channel, according to a YouTuber with millions of subscribers.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.