START UPS AND CAPITAL RAISING

The capital raising part of any startup company can be overwhelming, you will let all your friends and family know what you are trying to do. Hey they are usually the ones that come to the table first but then you quickly find that you need to bring your company to the next level so now you begin to map out a marketing plan to get this done.

The first path is to do a search and send emails to all the private equity groups, angel investors and even hedge funds that may have invested in your sector in the past, hey not a bad way to go. But then you don’t stop there, you begin to search on popular social media networks to connect with potential funding sources, now that becomes interesting.

You may get a couple of bites from those that you contacted but you have to make sure that you have all your material in order because when investors come knocking you don’t want to have them waiting 2-3 weeks until you get your paperwork in order, if you’re marketing your company for funding then all of your material should be ready to roll.

From my years of helping companies get funded and in some cases go public, the thing that always mattered the most is that a relationship with the funding source was there first, this is what made a cold call into a very warm call. There are legitimate people out there that have such relationships, this is why you will see many companies in technology get funded faster than others, its all about relationships.

Private Equity groups receive tons of requests and honestly I am sure that they don’t go through each and every one of them, that would take up too much time. So they prioritize what deals they will put on top of the list and then of course the others just sit there. They could be the best new tech or social media company to come to the forefront but in the end if you aren’t invited to their party they won’t take notice unless they actually are able to read through each executive summary or business plan.

Not everyone has these connections to make things move smoothly in the funding department so it becomes a numbers game. You keep plugging away until someone takes notice and if you have the right idea and meet the right person then things could change rapidly.

Now moving to social media, yes searching for funding on networks such as LinkedIn can be an answer but I have to stress to anyone that does this please be aware that although you have so many great and real private equity players on LinkedIn you also have those that try to take advantage of a companies lack of funding connections. In some cases they ask for an upfront retainer for them to help your cause while others will mask a retainer as a FEE to produce an assessment of your company to make it easier for investors to make a decision. You have some that will approach you trying to extract information and then fish it all over the internet in hopes of getting a bite or I’ve even heard cases of those people presenting it as it was their own deal.

The bottom line is that you need to be aware of who you are dealing with, you may get approached by middlemen promising you to get you funding but with no real foundation to show you that they can. Get some examples of deals they have worked on and what the results were, shoot in the entertainment industry there are so many people that put parts they played in their resume that never existed in the first place, so my point is just be careful with who you choose to represent your funding efforts.

If you ever get a middleman or even a funder that is asking you to pay a fee for you to get funding then RUN RUN RUN, if you ever get a middleman giving you guarantees then do the same and move on to someone that can actually help you and not waste your time.

Don’t get me wrong you do have some really great middlemen aka brokers that do deliver but just make sure that they are who they say they are and not just someone attempting to get you to pay a fee, extract information or worse just waste your time.

I traveled to so many countries through out my commodity and real estate career , I’ve seen it all and then some, this is what prompted me to write this article. Information is important and if this article helped just one person to think twice about a questionable situation then it was worth the time to write it.

Networking is key, get out there and start networking with not only private equity firms, angel investors but also with companies in your arena that may have opened up doors already.

I’m always open to speak to private equity firms, angel investors and entrepreneurs internationally.