Raising Money The Right Way

Not too long ago I had a meeting with a fairly new marketing and technology start up company

. I met the Chief Financial Officer and the President right off the bat, and I was impressed with how organized they were with sharing what they were about and discussing a way we could potentially work as a team to reach their goal of raising some new capital for their business. Ordinarily this isn't how my meetings go, as much as it saddens me. If you're a business owner and you're out there trying to raise some money for your company, here's a few things you should be thinking about.

1) Make sure you're on time for all of your meetings.

2) Make sure that anyone you meet with signs an NDA (Non Disclosure Agreement). Make no exceptions to this rule.

3) Be sure that you've prepared your business model so that you can explain it in as simple terms as you possibly can.

4) Be polite.

5) Be honest with your potential investors.

6) Prepare yourself to discuss any terms of your deal (such as the use of any proceeds), and how you'd work out paying any sort of consultant that helps you raise money.

7) Have your professional business plan already made up and ready to go.

8) Get a good attorney, and have them write up a Private Placement Memorandum for you. I've seen far too many entrepreneurs try to raise money with just a business plan.

9) Make sure that you're in a position so that you can do most of the raising of money yourself. Investors want to know what the story is from the people who are actually running the business.

10) Only meet with a consultant if they've shown themselves to have a proven track record of raising money from solid investors, and make absolutely certain that they're a nice fit for your business. It will always take time to raise the capital you need, and anyone saying they can raise it overnight is a fool. You're going to need to WANT to be around this consultant and working together with them to achieve your goal.

Now, I don't know if I'm a fit to help the company I mentioned earlier to raise their next round of capital. However, its certainly worth meeting with their CEO and having a discussion to see if there's a fit between us. With this particular circumstance, its very important to make sure that you inform people that you won't be heading out to help them raise money without being compensated as a consultant for your time and hard work. The securities laws prevent consultants such as myself from earning a commission based on this event in any way, shape or form. My lawyer makes certain that I'm always clear on that point.

by: Cliff Jones

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