How do you find someone to help you raise capital?
Firstly, there are several categories of help, and some deserve the cost and effort while others do not.
Finders, people that claim they will introduce you to investors are generally just conman, or women. Rarely, if ever, do these people have any real influence or credibility. By definition, if they are getting paid something to do this, then they have lost all credibility by creating a conflict of interest. They have an instant conflict of interest. A “warm referral” is free because the person knows enough to be confident in you and your pitch, at least enough not to embarrass them – which frankly most pitches would do because they are so poorly crafted.
Investment Bankers typically are interested when you wish to raise $5M+. Some have no interest until you are seeking $20M or more. This means you are already an established company with revenues, a quality team and a proven product already. Typically, some profits too. So, this is not an option for startups without any revenue generally.
Financial and CFO types. Some of these can help, most, maybe 90%, not so much. Financial people are accountants, and most just have little to no experience raising capital. It is literally a different profession even though it is under the “Finance umbrella”. That said, some CFOs in early-stage companies do specialize in this, often in one or a few industries. These are worth interviewing, but can be very costly. I have found most want over $200-$300/hour, and they are not worth that if you can find the right Consultant that can do more for less. Be very careful.
You may need a CPA or accountant to help you, but I recommend against using these people to do all your financial projections. They are experts at financial history, tax laws and GAAP accounting practices, and usually the opposite personality of an entrepreneur. I always build a “Financial Simulator” myself, never a P & L which is a snapshot projection. A simulator is built using the key revenue drivers as variables, you can easily change all key (unproven) assumptions and do sensitivity analysis. This can be done and as learning flows, and you can instantly update key assumptions (almost always wrong) to adjust your plans and triangulate in on the correct financial plan and projection.
Consultants who specialize in raising capital and have raised it themselves for their own company. Usually, these people focus on a certain category of capital like VC, angel or crowdfunding. Like in any profession, many are hacks that add little value, others are very valuable and could potentially enhance your ability to close a deal by a factor of 2 to 10X. Few have experience across the many sources of capital and can recommend a full financing strategy over 3-5 years. For that, we offer a flat rate package here. Or hourly consulting. Call (619) SCALE06 from 9am to 6pm CT.
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As with any consultant, the key is picking the right one, that has done EXACTLY what you want to do many times before. Most will take any job they can get and do not have the experience actually raising capital themselves as a CEO ideally. Would you hire a football coach that never played football? Some might write business plans, help improve slide decks and advise on the financial projections, but few can take those tools and actually help execute the process of approaching investors to close a deal. This is a different expertise. It requires broad experience. We have helped close over a hundred deals with around $1 billion in funding.
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You want to ask for a list of deals they have closed, meaning ran the entire process and project. And it needs to closely match your company’s stage of development. Startup funding is completely different from mid-market companies that have a history of revenue or mature companies that can typically get bank financing based on cash-flow and/or assets.
How to Raise Millions for Any Company - Online Video Course
Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.
Call (619) SCALE06 or email [email protected] for a complementary strategic consultation.
