How much capital can a company raise at each stage of its development?
These stages have evolved over time and the ranges are somewhat elastic, mainly based on the quality of the team involved. If you have three top people with 15+ years’ experience and success each as CEO, Chief of Product Development and head of sales/marketing you may be able to get a pre-money valuation of $5M to $10M today with a quality deal. With just a founder and a business plan, your company is likely worth less than $500K. This assumes a $1B market potential, $100M+ revenue potential in five year (top 5% of all companies ever) and some nice progress on product development or actual revenue.
Do not try to do this alone. For that, we offer a flat rate package here. Or hourly consulting. Call (619) SCALE06 from 9am to 6pm CT.
Bootstrapping – This is where the founders are putting in sweat equity, and possibly a small amount of cash investment as well. Founders often bootstrap longer to keep more of their own companies by investing $50K...
Should you use a finder raising capital?
Absolutely not. These people are usually pretty much scammers. It is illegal for anyone, except SEC licensed brokers, to sell stock to other people. There is some gray area here, as they can make introductions, but these usually have no weight at all with investors. And they can never take a percentage of the stock or cash in the close for these “introductions”. Run, don’t walk from anyone seeking a percentage of funds closed to be your “finder” or “Consultant” to do introductions.
Click here to get this Financial Package
How to Raise Millions for Any Company - Online Video Course
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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...
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...
Build the company of your dreams and Raise Millions from Outside Investors
This $1,695 package includes four private online sessions with me working on your financing, and the offline work needed to review and edit your deck. It will greatly improve your BUSINESS, not just your deck. You will be "Level 5", or at least "angel ready" by the time we are done if you follow the guidance I give. This process usually takes 4-8 weeks, depending on your ability to focus on that work. Nothing worthwhile is easy.
And remember to not operate based on these common myths of financing:
1. Your idea alone is worth millions. NOPE! Pre-money valuation is only created when you put a team, plan and some value behind it via sweat equity and/or cash invested to create value - Unless you are Elon Musk.
2. Raising funding is easy - Not! Over 80% who try will fail. You need some experience on your team that has done this before to guide you to shorten the process and avoid...
What are options to raise venture capital?
You create value by doing the following before even calling a VC:
- Build a team of 2–3 committed founders with 10+ years' experience each.
- Develop a business plan, based on in-depth market research and competitive intelligence which covers your strategy for marketing, sales, operations, finance and product development (pure service companies rarely get VC money because the margins and competitive advantage is harder to justify the ROI these investors need).
- You develop a product that can be protected via intellectual property or other methods to create and maintain some “Sustainable Competitive Advantage” (SCA). First to market is SCA if there is a “Network effect” whereby you can maintain a lead through customer critical mass (i.e. Facebook/Meta)
- Ideally, finish a product and get some “Traction” which means customers paying. Angel investors may not need this, but most institutional investors will need this “Proof of concept”....
Where can I view data on startup valuations and funding rounds?
Raising funding is a complex process that few understands as they are often doing it for the first time. I would say about 90% of people I see present to angels just “don’t get it”. They do not understand what outside investors need to see to invest. The course above gives the foundational fundamentals that ALL investors want to see.
Developing a company that has a higher valuation can be the difference between owning < 15% (average exit ownership of founders) and 50%+ like Mike Dell, Bill Gates and Elon Musk. Bootstrapping, friends and family investment, then angels is the classic path, but there are over 40 other categories of investment funds that can be tapped into which represent more than 100X what VCs and angels invest.
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Pitch book just released a full report on...
What are some common misconceptions people have about raising capital?
1. Thinking it is easy. It will typically take 3–6 months of full-time effort. 80% will fail.
2. That the “Idea” is worth something. It is not worth $0 because anyone can copy an idea and do better at marketing, sales, product development or just dump capital on that idea
3. Thinking VCs are the best source, they are the worst for 90% of businesses. They finance at most 1 in 200 plans and represent a tiny percentage of business financing. A narrow niche of rapid growth, technology based companies mainly.
4. A company has value on day #1. It does not! Value and pre-money valuation come from team + plan + market research + product development. Investors generally put money in only AFTER value is created.
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The pitch deck...
10 Of The Most Affordable EMBA Programs and their Costs
The cost of an Executive MBA could set you back substantially, but it doesn't have to. Here are 10 of the most affordable EMBA programs.
Choosing to study an Executive MBA (EMBA) isn’t cheap. The world of graduate management education demands high fees in exchange for the return on investment you see if you work hard during your degree.
But going to business school to gain the experience and skills needed for executive leadership doesn’t have to break the bank. Although Executive MBA programs do tend to lean on the expensive side, not all the world’s top programs will set you back six figures.
Here are 10 of the most affordable Executive MBA programs, according to the Business Because Special Report, Executive MBA Insights: 10 Leadership Challenges For 2022.
10. Santa Clara University’s Leavey School of Business
Executive MBA cost: $111, 715
In at number 10 is the Executive MBA at Santa Clara University’s (SCU) Leavey School of...
Fixing Venture Capital
From www.Joelonsoftware.com
Many software companies these days are built using some form of venture capital. But the VC industry has been hurting lately. A lot of investments in dot-coms turned out to be spectacular flame outs. As a result, VCs are becoming ever more selective about where to put their money. To get funded these days, it's not enough to be a pet shop on the web. Nope! You have to be a pet shop on the web with 802.11b wireless hotspots, or your business plan is going right in the dumpster.
The formerly secretive world of VC has become a bit more transparent, of late. VCs like Joi Ito, Andrew Anker, David Hornik, and Naval Ravikant has created weblogs that are a great source of insight into their thought process. That dotcom thing resulted in three great books by company founders that look deep inside the process of early-stage financing (see footnote). But as I read this stuff, as a founder of a company, I can't help but think that there's something...
The Financing Landscape Today
Note: This article was written in 2004 and has been updated, though the evolution of the market has continued traditional expectations in 2013 still seem to have faded.
The financing landscape today has changed radically. Everything you learned in the last 5 years is obsolete. We are back to looking like the early 1990s again as everyone has "moved up the food chain" one to two levels. True Series A financings with money designed to develop the product are very rare and most first institutional investments are in companies with proven "traction", this means lots of sales completed. In the past there were usually TWO rounds of financing before this was required, one to develop the product and another to accomplish the first several sales by testing the sales and marketing processes. This means you need to get much further on much less money. This can mean adding a service component to your market entry strategy, corporate partners, or many other strategies, but unfortunately,...
