"We are currently working on new products that will be launch in the coming months. Raising capital has become one bottlenecks to constraining our growth. It seems that this might an area that you have expertise in assisting with. Is that the case?"
I get some inquiry like this three or four times a week. My thoughts are generally, "Other than raising capital, what are the other bottlenecks constraining your growth?" followed pretty immediately by, "What is my expertise?" The latter being more of an existential question for me than a concern for you as a business owner. So, with no further ado a few bullet points to help you overcome raising capital as a bottleneck.
- What are you selling? I like to start there because revenue will always be the best capital in the world. You only need to raise money if you're not generating revenue from sales. Are you pre-revenue because your product isn't ready? Or do you have a good, product or service and need to improve your sales? Note - typically you improve your sales by marketing your products. I know, I know. Marketing is expensive, hence why you need to raise money. Have you tried earned marketing?
- Earned Marketing is really just a fancy name for community building. Community building is a fancy term for "Network". The biggest bottleneck most Founders encounter when raising money for their business is they do not have a network. Specifically a network of high-networth individuals. How does one overcome not having a network of high-networth investors? You build one. Granted, building a network takes time and you probably waited until you NEEDED the funds to start looking for them. Start building your community and finding investors (high-networth or retail) by engaging in earned marketing. Read this article on The Magic Whale Formula to learn how: https://hustlefundbaby.medium.com/the-magic-whale-formula-824652a77d13
- Know your funding options - What are your options for raising capital? Banks? VCs? Angels? Investment crowdfunding? The thing is that each of those require the same information. So regardless of who you go seeking capital from you'll need to tell them the story of your business and why they should invest. A bank won't ask for a 30 second or 3 minute pitch video. But everyone else will.
In short, and you already knew this, there is no shortcut or secret formula to raising capital. If you're a recognized expert within your field or industry you have a built in network of individuals who you can engage as potential investors either via RegD or RegCF investment vehicles. If you are not well known or a recognized expert in your industry well then, guess what? You better get started marketing yourself because despite what we'd like to think no investor invest in a) strangers b) strangers they don't like. Too, more often than not, especially with Sharks and VCs, they're not betting on the business. They're betting on the Founder. Help make it easier for potential customers and investors to bet on you by building your personal brand, selling yourself and then using your social capital to raise investment capital.
Questions?
Register for FREE to comment or continue reading this article. Already registered? Login here.
1