The Secrets of a successful financing campaign (Part 2) – Understanding the Challenge

Much like for any other venture, one must understand what one is getting oneself into.

Fundraising is not easy!

In fact, it is one of the most frustrating and time-draining activities an Entrepreneur will face, in the course of the company development... yet it is also one of the most exhilarating one!

Be ready for it: It always take much more time than one would like to... but unfortunately, there are no shortcut to the journey.

Realistically, the process will take anywhere from a few months (never expect less than 4 months once you start your roadshow) to … several months (meaning over a year)…

Unless you are really lucky and investors come to you, fundraising will likely involve taking many meetings with investors of all kinds, both good and bad, before you ultimately succeed in finding someone who believes in you. You will meet many types of investors along the way, including:

• Investors who doubt you as a founder/CEO, and your ability to execute

• Investors who are meeting with you because they want to invest in your

competitor

• Investors who don’t have the money to invest but want to appear active in the

ecosystem

• Investors who will want every inch of detail about what you will be doing for

the next five years, when you both know your projections will be speculative at

best and hogwash at worst

• Investors who don’t get what you do at all, but will have an opinion about your

product because their child or spouse has one...

• Investors who are amazing and give you insanely poignant advice, but they

would want to see more traction before they can consider investing

• Investors who provide you with great feedback and would help you greatly if

they were involved, but will only invest if someone else leads the round

But there is more than that, the same investor ( when it's a company . - VC or investment fund, or family office) may turn down a project simply because the person to whom it was presented rejected it for whatever reason, while the same project could be validated by the very same investment company simply because it was presented to a different employee, with a better understanding of your business, a greater experience, or simply a higher position allowing him/her to step out of the “official company policy“.

As an example, one of my projects once was rejected by an investment fund on the ground that they were not doing Greenfield projects (in other words, start-ups). Well, the very same Investment funds eventually joined the pool of investors because the project was introduced a second time to a different Investment Manager, with a higher rank than the first, by a “finder“ who knew him very well.

Ultimately, none of the investment funds I worked with (there was three of them) ever did Greenfield projects … until us!

In other words, whenever possible, try to be recommended or get the assistance of a finder who knows the potential investors well. It will increase the chance of success, speed-up the process, and in-fine not cost much as:

- Good ones ALWAYS work on success fees (my recommendation, stay away from

anyone asking for a retainer or any type of up-front fees)

- The success fees usually range from 1 to 3% max

- Investors are familiar with the system and understand the financial need will be

increased by the finder’ s fees (although they might try to renegotiate the

amount with him!).

This said, the role of a “financing finder“ should not be confused with the one of a party which might help you set-up your financing strategy and supporting documentation. Indeed, while the “only thing“ you would expect from the first is an “address book“, the second will actually create all the tools required for the “financing finder“ to open the right doors, and to you to optimize your chances to succeed. Thus, those are usually two different profiles.

Stay tuned for more tips, or contact Fred by mail, write a comment here-below, or just click on the Chat button to further discuss this topic... or any other 😉