Having Problems Raising Money for Your Business? A Mega Tip
A year or two ago I sat on the Board of the Small Business Council – this was a group of entrepreneurs, handpicked by the UK government to advise them and the Department of Trade & Industry on all things related to Startups, Entrepreneurs and Small Business.
We would meet regularly as a board, look at programs to stimulate small business, proposed laws and regulations, meeting with tens of venture capitalists, angel investors and private equity folks at a time, as well as other small business owners around the UK and Europe. My area of interest and where I spent most of my time and energy was being a part of the Small Business Investment Taskforce looking at funding for small business and the Angel/VC and Private Equity Communities. This whole experience was challenging, stimulating and the learning curve was hyper incredible – it was seriously a once in a life time opportunity and worth going back to the UK for (after it finished, I went back to the US…)
So what has this to do with you having problems raising money?
Well, one of the insights this extended group came up with and reinforced by a monumental survey they undertook for a few years (called The Big Survey) – was that there was “no shortage of cash for small business” and just so you know, part of this study and the research after included looking at the startup environment in other countries – Europe, Australia and the United States. Supposedly, this was true not just in the UK but in those countries too…
I’ll pause there because, if you have tried or are trying right now to raise money for your business, you may have just fallen off your chair. Get up and I’ll type it in again so it doesn’t get missed.
One conclusion they came to was … “There is no shortage of cash for small business (…and startups)”
Now, when they tried to tell me that as an entrepreneur that has gone through the hot and sweaty crucible of raising millions of dollars by giving pints of my blood, crying into my startup pillow late into the night, and gnashing my teeth in absolute frustration – I found myself sitting on the edge of my chair and arguing – “Are you kidding? When you’re starting a business – finding cash is next to impossible…” I yelled across the boardroom, purple faced, heart racing.
With urgings to sit back down and wondering if they should call Security, they calmed me down and spent the next two hours is whispering my disagreement…
Do you know what they showed me – and what I’ve since had reinforced by multiple conversations with CEOs and Startup junkies?
And this is worth slowing down for too….
There is not a shortage of cash for startups and small businesses – even in this economically challenged times….do you know where there’s a shortage?
…there’s s shortage of companies that are READY to receive an investment from an angel or venture capital investor.
Yep – You may think your business is ready to get cash from an angel or a VC – but maybe, just maybe, it isn’t.
It may not be that Investors have all gone on vacation just when you are raising money – it may be that either you are not yet investment ready or, and these two points could be true too… either…
There is a mismatch between where your business is versus what investors want to see or
You aren’t communicating where you business is at in the right way for investors to digest and get comfortable with.
Now this is big stuff – because if these points are right – perhaps it isn’t that there are no investors around, or that cash has all dried up – maybe, just maybe, you need to think different (read: rethinking…) about how you pitch your business or (and this might be tougher to accept…) perhaps you need to make a little more progress in your business before you are ‘investment ready’. But having raised $5M+ with a business plan, a couple of people and a concept after the dot com bubble had already burst – in my view – it’s probably the former – you may need to re-examine and rethink HOW you are pitching your business to investors.
Are you ‘investment ready’?
And how should I do that Andrew?
That – dear Reader – will be an extended topic for yet another blog post…
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