It is hard to raise money. Yet, building and growing a business often requires capital. However, simply needing cash doesn’t mean you are ready to ask for and incorporate investment into your venture. Being ready to raise money means knowing how much you need, what those dollars are being optimally used for, and how and when those dollars will convert to a meaningful return. This episode begins the discussion on assessing whether or not you are “venture ready.”
When to raise money:
- Acquisition
- Buying a company
- Getting investment
- Who to get investment from
- How do you know when you are ready to raise money?
- What is your venture worth?…Not just to you, but what someone else is willing to pay for it. Value is in the eye of the buyer:
- Why are you trying to raise money?
- Is the opportunity clear enough with enough proof to be demonstrative for an investor to see the potential for a 10X opportunity exit?
- It isn’t enough to show comparable of other companies are paying good multiples…need to demonstrate genuine value in your venture to raise money
- Don’t be entitled when you go out to raise money
- Don’t tell investors that “$100MM easily reached”
- Don’t ever tell investors that “demand is so huge I’m not even returning their calls”
It is very challenging to raise money. Be smart and be prepared so that you are ready to go out and raise money.