The best ways to raise capital are based on common sense and experience. But don't make the biggest mistake that everyone makes on social media sites, such as LinkedIn, for example.
1. Don't start at the top. Venture capital or institutional investing is geared at existing companies. Once you have proven to have the right management, a great product or service, an existing business model with existing sales, the ability to find seed funding, and you experience explosive growth, the time will be ripe for VC's to step in. Not before that, don't try ways to raise capital that you are not ready for. Even companies like Google or Microsoft started out small.
2. Do use ways to raise capital that work for you and your situation. In every single case though, start with building relationships. That's even a requirement from the SEC. You can not market your business plan/investment proposal to the general public. You need to have a pre-existing relationship with an investor before you can talk about a specific investment.
3. One of the best ways to raise capital is by invitation. Connect with investors by personal introduction. These introductions may come from angel investor groups, business plan competitions, privately organized investor pitch presentations, introductions from personal relations (bankers, attorneys, accountants, etc).
4. Once you face an investor or a group of investors, talk only briefly about your product or service. The best ways to raise capital from them is to find out what they want, that's why you need to build relationships first. Find out which sector they want to invest in, how they invest, what they expect from entrepreneurs. Get to know them first. Find their hot buttons.
5. When you have some interest, learn how to proceed during the negotiations, and how to close the deal. It is one thing to make a great presentation, yet another to keep the attention going, and have them chase you to wire money in your account or write you a check.
6. Be prepared. In any situation, there are opportunities for successful ways to raise capital. Have your pitch ready. The proverbial elevator pitch is great, but find ways to summarize what you have in 1 minute, 5 minutes, 20 minutes. Find the right tools for each and every situation. It may be a business card, an email signature, an executive summary, a power point presentation, or a video. Or whatever else you can find to deliver your message consistently, logically and interestingly.
7. Start talking. A big rule in your arsenal of tools of ways to raise capital, is to use your tools. Don't wait for them to ask you. Bring it on!
8. Create your own support group. Remember, this is important, you can not do this alone. Find people who believe in you and your cause. Ask them for information, contacts, introductions, knowledge and wisdom.
9. Finally, back to number one, don't start at the top. Do the footwork, get all your paperwork lined up. Prove that your business model works. Get started with your business, if at all possible, that will create an enormous amount of goodwill. Talk with the people closest around you. Create that support team. Line up the tools that you may need to use all the ways to raise capital.
Success will follow.
When we started out with this website, we intended to share our experience as professional business plan reviewers. We have information on what makes a business plan successful, just acceptable, or why it gets rejected. We did not have all of the answers on how to raise capital successfully. At some point we partnered with Growthink. This company has created products and services to help entrepreneurs get funded, build their business, make them very profitable, and exit them successfully. We were very impressed with their claims. We checked and investigated several of their products. We were even more impressed. As a result we offer their free business plan template, and a long list of other valuable products. Growthink's clients have consistently reached top results, they actually created new benchmarks. Dave Lavinsky has been in every major media outlet with incredible success stories. Please do check what they offer.
In view of this article, take a look at Dave's presentation called 'Truth about Funding, the best ways to raise capital'. (a new window will open, please take 15 minutes time to watch this very informative presentation).
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