Raising Venture Capital – Start Up
Posted by admin on 2 Feb 2011 7:06 am. Filed under How To Finance Your Work.
Lance Shields
Profiling Investors
By its very definition of being a start up, there are no sales, no operation and no earnings. Only an idea and a story. In many cases, the entrepreneur doesn’t have provable track record of success. Each year, I receive thousands of business plans from individuals seeking money to fund their idea. They almost all make the following mistakes.
Poorly written business plan.
The business plan is the explanation on how you are going to execute on your idea. It needs to be well written and contain all the information an investor needs to learn.
Target Wrong Investor Type.
You must properly profile your investor type. Send your plan to 1,000 people who are not interested and their default answer is no. Send it to 10 who are interested in your idea and you will get a few maybe. The key is to profile the type of investor who will be interested in your idea. The wrong investor type is anyone who is a professional investor that you think will put up all the money. Venture Capitalist and Professional Angel Investors almost never invest in startups. The reason- no sales, no operation, no earnings and enormous risk. Additionally, with most startups you end up losing your entire investment. You can solicit professional money once the business is a going concern and you have proven you can make money.
Target Right Type of Investor.
This is where your profile comes into play. Example. Your likely investor will be male, age 30 – 60. He owns his own business. Your lack of experience and track record won’t stop him from investing if he likes the idea and your plan is well written. He must have a reason to like your idea. He has a special interest in the concept. Example: You have a new type of golf club. He is an avid golfer.
Identifying the Investor
After you profile the investor, you need to find resources that will help you identify people who will match your profile. This you need to think about because it is both easy and difficult. The easy part is there are many resources that you can access to help you identify these individual investors. In some cases, you can establish methods to have them initiate contact with you. The difficult part is that there are federal securities laws that govern what you can do. You need to familiarize yourself with these rules so you don’t inadvertently violate the law.
I can tell you that almost all persons trying to raise money can be successful. You need a really good business plan, your investor documents and a good marketing plan to identify the investor type who will be interested in your idea.
One last thing.
Investment Amount
It’s about risk. Even if the investor likes your idea and your plan. He is not going to fund hundreds of thousands of dollars. You must offer them the ability to invest an amount where they can live with the risk. Set your sights on $1,000-$25,000. People will take a flyer on an idea if they can live with the risk. The lower your minimum investment requirement the more likely they will say YES.
For more information on Profiling and Finding Investors go to:
http://shicap.com/venture-capital/finding-investors.html
For more information on Raising Startup Capital go to:
http://www.shicap.com/venture-capital/start-up-capital.html
For more information on How to Create Investor Documents go to:
http://www.shicap.com/venture-capital/investor-documents.html
Profiling Investors
By its very definition of being a start up, there are no sales, no operation and no earnings. Only an idea and a story. In many cases, the entrepreneur doesn’t have provable track record of success. Each year, I receive thousands of business plans from individuals seeking money to fund their idea. They almost all make the following mistakes.
Poorly written business plan.
The business plan is the explanation on how you are going to execute on your idea. It needs to be well written and contain all the information an investor needs to learn.
Target Wrong Investor Type.
You must properly profile your investor type. Send your plan to 1,000 people who are not interested and their default answer is no. Send it to 10 who are interested in your idea and you will get a few maybe. The key is to profile the type of investor who will be interested in your idea. The wrong investor type is anyone who is a professional investor that you think will put up all the money. Venture Capitalist and Professional Angel Investors almost never invest in startups. The reason- no sales, no operation, no earnings and enormous risk. Additionally, with most startups you end up losing your entire investment. You can solicit professional money once the business is a going concern and you have proven you can make money.
Target Right Type of Investor.
This is where your profile comes into play. Example. Your likely investor will be male, age 30 – 60. He owns his own business. Your lack of experience and track record won’t stop him from investing if he likes the idea and your plan is well written. He must have a reason to like your idea. He has a special interest in the concept. Example: You have a new type of golf club. He is an avid golfer.
Identifying the Investor
After you profile the investor, you need to find resources that will help you identify people who will match your profile. This you need to think about because it is both easy and difficult. The easy part is there are many resources that you can access to help you identify these individual investors. In some cases, you can establish methods to have them initiate contact with you. The difficult part is that there are federal securities laws that govern what you can do. You need to familiarize yourself with these rules so you don’t inadvertently violate the law.
I can tell you that almost all persons trying to raise money can be successful. You need a really good business plan, your investor documents and a good marketing plan to identify the investor type who will be interested in your idea.
One last thing.
Investment Amount
It’s about risk. Even if the investor likes your idea and your plan. He is not going to fund hundreds of thousands of dollars. You must offer them the ability to invest an amount where they can live with the risk. Set your sights on $1,000-$25,000. People will take a flyer on an idea if they can live with the risk. The lower your minimum investment requirement the more likely they will say YES.
For more information on Profiling and Finding Investors go to:
http://shicap.com/venture-capital/finding-investors.html
For more information on Raising Startup Capital go to:
http://www.shicap.com/venture-capital/start-up-capital.html
For more information on How to Create Investor Documents go to:
http://www.shicap.com/venture-capital/investor-documents.html