Financing Through Private Equity, Seed Capital or Angel Investors

This article was authored by Jeanne Heydecker and originally published on the Woomentum network.

Over 99% of the entrepreneurs who go out to raise money get rejected. So you have decided you really do need to raise money. Do you understand what it takes to raise money and what investors are looking for? Do you know how to assess what is fundable and what is not? Are you getting rejected by investors? Do you need to move to where the money is? Do you know what is the current valuation range for your company? Can you enhance the valuation? What are the levers? What are your different types of financing options and what are the mechanics of those?

Before actually pitching investors, you might want to connect with a few through LinkedIn or Angelist that fund companies in your industry and ask for informational interviews to seek advice on how best to pitch investors (keep it generic – not a funding pitch). Connect with other entrepreneurs in similar industries for the same advice. Network with entrepreneurs at local business networking events. They may be able to introduce you to investors they’ve pitched to and give you advice on how to successfully pitch with them.

Finding the right investors is like a marriage. You may need a mentor, a partner or someone who will leave to your own way of doing things. This marriage goes both ways – what you bring to it is just as important as their investment. The money may be great, but the dictatorial, hands-on investor can wreak havoc on a chilled out software development work environment, but be excellent for a manufacturing venture with a tight turnover schedule. A good mentor, with the right contacts and regulatory experience may be more appropriate for someone venturing into the medical device industry or financial services.

Investors are going to want to know why you need the money. It shouldn’t be to pay current outstanding bills but to take your company to the next level. Try to have a minimally viable product or service already launched and a few paying customers. You don’t have to be making a profit, but it helps. What you plan to do with the money is vital since VC’s are responsible for spending other people’s money and need to account for it. Have a clear plan on how the money will be spent and share the vision for what the company will look like once you’ve executed on your plan. Investors are incentivized by the number of positive exits they make, and the higher your pitch’s potential, the higher the likelihood they’ll fund you.

So what has been your experience when pitching? Did you know Woomentum is giving away ten free pitch reviews?

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