Tuesday, January 12, 2010

Seed Money: Will Your Startup Attract It?

Want Seed Money for your new business? You may or may not have figured out by now, you can’t just walk up to a potential private investor, tell him or her about your company or "Revolutionary New Product" that will change the world, and expect them to back a Brink's truck up to your front door. No way, No how, No Dice. If you want success in attracting funding as a start-up or at any level of business, you must learn how to attract that money to you.

Is it a secret? No. The only thing holding you back from you and your dreams, is language. In your case, it's the language of capital. At some point, it may be the language of telling your story, but we'll stave that for another day.

So what’s the secret? To steal license from a famous movie: “What do Angel Investors Want?” The short answer is: put yourself in the private equity investor’s shoes, and think about what you would want before you invested your children’s inheritance in some startup company. The answer should come from another movie: "Make My Day".

Here's a shocker.... It’s not the “easy-no effort” seminar version that gets you all excited, but won’t put a nickel in your pocket. These are answers based on the experience of raising “real money” from “real private investors”.

First, realize this. The favorite radio station of any investor is a WIIFM: “What’s In It For Me?” Unless you're able to convey clearly, quickly and concisely, what they are seeking, you’re out. Angel Investors & Venture Capitalists have no patience for folks who beat around the bush and are a waste their time.

Further, as a sophisticated private investor, I have come to learn that everyone thinks their idea is the "greatest of all time". Not all good ideas (e.g. good for you) are good for someone else. Find out what the investor wants, then give it to them. If they don't like technology, but love kids, and yours is a software program to help kids, discuss what you can do for children, NOT that it's the best technology out there.

Next, those who have become wealthy via investments - enough to have capital to reinvest - did not get there by taking excessive risk with their money. The reason why lottery winners generally end up poor again is because they never learn to manage money.

It was Will Rogers that once said: “When it comes to investing, I've always been more concerned with the return of my money than the return on my money."

To attract Angel Investors, you must change your language of capital. You must be able to explain how you plan to manage the risk of his princial and how he is going to acheive his ROI = Return On Investment. In other words you need a realistic exit strategy—perhaps more than one.

There is risk in everything and you must address the question of risk. Unlike the heard, sophisticated investors tend to be excellent at managing risk. If the risk level in your business plan exceeds their idea of an acceptable and calculated risk, no offer of a return is going to convince them to place their capital with you.

Lastly, and perhaps most importantly, the most compelling consideration for the Private Investor is: “YOU”.
Angel investors have a saying, “Aim where the bird is going, not where it is now”.

Consider this... Would you invest your money with someone you didn’t know or respect - regardless of how great the idea was? I don’t think so.

Do you live your word? Are you of high integrity? Do you have the experience, knowledge and expertise and the team to see this business idea through to a successful conclusion? ...if not, are you willing to do what it takes to acquire or the knowledge or the talent to do so? Accept this: No Angel investor is going to entrust you with their capital, unless these questions are answered and demonstrated to their satisfaction.

To find out more about raising seed money for your startup, check out http://www.GlobalCEOspace.com

Saturday, January 2, 2010

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