HOW TO RAISE INVESTMENT MONEY IN 2023
If your startup or small business needs to raise capital, you will love this guide. I've raised twice and got into the notable "Techstars" accelerator.
Investors are looking for three things: Team, product, and traction.
At least ONE of these three things should be massive.
When my company got into the Techstars accelerator in 2014, the above law held:
One team who were in the same class as us at Techstars hadn’t written a line of code but the founder had exited a company for like $10million+, others were ex-Google, Zynga, Yahoo, etc.
Another team in our Techstars accelerator were very early but had designed a unique widget that could be in every department store in the world; another used machine learning algorithms to make language learning faster (Lingvist, who have raised $9.4 million to date)
We were in the Techstars accelerator as we were getting over two million unique visitors a month on our sites.
James Altucher said it best: It takes six months to raise money in an AMAZING business, infinity in a mediocre business.
So, heed rule #1: Don’t look for investment until you have one of “the three” absolutely popping’ off. If I had to choose one of the three, it would always be traction, followed very closely by a unique, defensible product (particularly if it’s a tech product that would be hard to build, or has a community, which also gives you a position of strength). Also, your pitch will succccccc the first time you try, so don’t burn it on the best investors
Follow Guy Kawasaki’s dream slide deck process or similar, showing one slide each for: Problem you’re solving, the solution you’ve created, market size/opportunity, team, traction, etc.
Front load the deck with whatever is your most impressive of the three.
“Before I start, let me tell you a little about our founding team” (If team is strong). “We’re growing fast and are already making £10,000 a month” (If traction), “Let’s dive straight into the product, it’s amazing” (if product).
Make sure it’s clear in your pitch deck how the investors will make a 10x return on your money.
There’s a fair chance your company will run out of money if you are in teh game of raising investment. The KEY is to not look/sound desperate, even if you are.
The problem with this is investors can smell that and will use it against you. The way to inoculate yourself against lacking credibility is to have phenomenal market knowledge, and a vision for the future (make sure you talk about the future, people never think about that deeply enough).
If you’re spending time trying to hire someone to make the deck, you’re doing it wrong.
Use Google slides, black background, Proxima Nova Font size 40 or above (not many words per slide or people read the slide instead of looking at you), lots of nice pictures. If you don’t know your material (very bad) you can just write out your talk on Keynote with the script which shows you your notes next to the slide.
Who should you raise money from?
The mafia (and gangs in modern day, to a certain extent) are looked upon favorably for “only going after their own”, i.e. generally only attacking people who have chosen to be in that lifestyle and have then messed up.
Have the same mentality with investors:
Don’t take money from people who NEED to make the money back they give you.
Investors are like record labels:
They invest in 10 companies (bands) and only expect one or two to be massive, recouping the losses of the others and making a huge profit on the side (Adele, One Direction, Facebook, Uber).
THUS if you take money from institutional investors and the company fails, they’re not gonna make you sell your house to give you their money back (Yes, that has happened, founders have had to remortgage their house to pay back investors as they got into bed with “the wrong people” as they needed the money that bad).
No chance of the above.
They know “the game”.
Likewise, if you borrow $25,000 off a family member or friend, that is a TONNE of money to them, and they will likely hate you forever for losing it.
The game is the game.
Your blood is their gold, and they expect you to work until near-death to make them they money, so they have to accept a few failures along the way.