Will it turn investors off if you tell them about your mission?

Will it turn investors off if you tell them about your mission?

I’ve talked to many entrepreneurs who have told me they deemphasize the mission of their business when talking to investors.  They assume that investors care most about financial returns, and they worry that talking about their mission could get in the way of getting funding.

This is a terrible idea!  Most investors actually want very much to invest in mission-driven businesses that are values-aligned.  If your mission is important to you, you need to say it loud and proud. Furthermore, any investor who does not like the fact that your company is mission-driven is not a good fit for you, and you should not waste time with them.

More and more investors are coming to understand that, in the long run, mission-driven businesses are likely to be more profitable and successful.  When talking to potential investors, if you sense a lack of values alignment, it’s best to move on. Always seek out investors who are focused on your business’ long-term success, not on making a quick buck.

If you stay true to what matters most, you can and will find investors who share your vision and want to support you on your terms.

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Do you have to give up control of your company if you raise capital?

Do you have to give up control of your company if you raise capital?

So many of us have heard horror stories of founders giving up control to investors and then being pushed to do things with their business they didn’t want to do or even getting fired from their own company!  

The good news is that it is absolutely possible to raise money AND maintain control of your business.  I’ve been helping clients raise money for over 10 years, and I have never had a client who gave up control to investors!

Every business and business owner is unique — ideally, investment terms should be tailored to each situation. Unfortunately, most lawyers and finance professionals are unwilling or unable to be creative.  

You live and breathe your business, and you have a vision of what the business will look like when it has reached its ideal size and level of impact. This vision is what should inform the terms on which you accept investment. If you accept terms that are dictated by an investor, you risk sacrificing your vision, goals, and values in the name of complying with whatever the legal documents dictate.

If you structure the investment offering in a way that reflects what you value most, you will attract investors who support you, believe in your vision, and trust you to lead the business in a healthy and sustainable direction—all while YOU maintain control of YOUR business.

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What stage does my business need to be at to raise money?

What stage does my business need to be at to raise money?

Based on my experience helping entrepreneurs raise money, there is no stage that is right or wrong.  In fact, some of my most successful clients have raised $700,000 to over $1 million before generating any revenue at all.  

If you have a compelling vision and a clear plan for how you’ll grow the business, you can raise money even if you’re at a very early stage.  On the other hand, I’ve had clients who have been in business for many years and also have raised several hundred thousand to millions of dollars for expansion.

So, no matter what stage your business is at, you can raise capital from investors.  You just need to make sure you connect with the right ones and avoid wasting time with the wrong ones.

My only caveat is that if you’re at such an early stage that you don’t really know exactly what your business does, how it makes money, what expenses it will have, etc., then it is too early for you.  You need to be clear on your basic business model before you design your capital raising strategy and reach out to investors.

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Is Crowdfunding Right For You?

Is Crowdfunding Right For You?

I’m often asked if I recommend crowdfunding. The answer really depends on what kind of crowdfunding and on your particular situation.  

Crowdfunding is probably the oldest way of raising funding that exists! Long before we had Wall Street and venture capital, communities got together to pool resources for projects. Over 30 years ago, Ben and Jerry’s first equity funding came from about 1,200 Vermont residents investing a minimum of $126 each.  

About ten years ago, Indiegogo launched and internet-enabled rewards-based crowdfunding took off. In 2009, Kiva started letting US-based companies crowdfund zero interest loans. Two years ago, Title III of the JOBS Act went into effect making it much easier to do a nationwide investment crowdfunding campaign.  

Donation or perks-based crowdfunding is a great tool when you want to prove that there is demand for your product or service. You need to invest quite a bit to market your campaign so that you can get lots of people to support whatever it is you’re offering. Due to the sheer volume of companies trying to raise money this way, there is intense competition and it can be very challenging to get attention for your campaign. You’re lucky if you break even by the time you factor in the marketing and fulfillment costs. Therefore, I definitely  don’t recommend using this tool for the purpose of raising money. If you think of this kind of campaign as a marketing expense rather than a way to raise money, it can be a valuable tool in your toolbox.

If you are looking to raise money for your business, I recommend investment crowdfunding.  Unlike perks-based crowdfunding, this type of crowdfunding allows you to offer an actual investment opportunity to supporters. You can offer equity, debt, convertible notes, SAFEs – any kind of investment that you want. Because this type of crowdfunding involves offering securities, it is more highly regulated than perks-based crowdfunding. You need to jump through some legal hoops and have a lawyer draft your offering documents to be able to take advantage of this type of fundraising, but the results can be well worth the effort! When you offer an investment opportunity to the public and anyone can invest, it is much easier to find the right investors for you and to raise money on YOUR terms. Fewer businesses are using this type of crowdfunding compared to perks-based, so it is much easier to stand out from the crowd.  

For more information on our next live three-day intensive training, please visit Fund and Fuel Your Dreams.

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How to Escape the Bootstrap Trap for Good

How to Escape the Bootstrap Trap for Good

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