Raising Capital During these troublesome times…

by JGARCIA

How to look for capital during these times……

Today's economy has taken the confidence out of private investors globally. However, the need for capital to start or grow entrepreneurial businesses today remains the same.

So how do you find the capital you need today?

First, be prepared for a much longer process than any time in history. This doesn't mean that you will not succeed. Just be prepared for a longer road ahead. This also means that you should have some resources already in order to seek capital because it does take resources to pay for airfares, trips and lunches in order to get in front of investors.

Second, if you are the CEO of the company you should be spending 100% of your time seeking capital during the time that your company has decided to look for it. You should stop all operational activities and had those activities over to others on the team. If you are a solo entrepreneur, stop doing the software development, customer service, or product shipment and focus on the money otherwise you will never get it. If your business cannot handle your leaving the operational day to day activities while you look for the money then you should not be seeking capital in the first place.

Third, plan on the type of capital that you will look for. If you truly believe that you can get money from an organized angel group or venture capital group these groups are totally different animals and you should know exactly what these groups invest in and what their appetite is today. Forget trying to get their attention if you do not have a warm introduction from an attorney, accountant or someone they know and trust. Looking for capital from these professionals is a subject for a whole new blog entry.

If you are looking for private capital begin by looking locally. Look around. Is there no money where you live or work? In most cases there is capital in your local market you just haven't learned how to look for it. When was the last time you attended a local networking event? When you were there did you talk to one person all night or did you make a point to get around to everyone? Networking during these tough times should be a weekly routine for all entrepreneurs seeking capital.

Fourth, make sure to use the rule of referrals. This means, when you are looking for capital the further you go down the referral line the higher your percentage of success is.

What does this mean? Well, let's say you pitch your best friend to invest in your company. He decides it is not a good idea but refers you to his long time friend. This friend takes a close look at your company but also decides not to invest. He refers his friend from college days and this person does invest. I have seen it over and over again. The third to fourth referral increases your chances of success. Unfortunately, the reason more people do not get to the third or fourth referral is that they are simply not disciplined enough to follow the referrals and rather try to find new contacts only.

When you get in front of the investor……well this is a whole new subject….but you better be prepared otherwise all of this hard work was wasted.

If you are interested in hearing what you should be doing to pitch, read the blog on pitching posted earlier.