Hold Your Horses!

How to Develop an Effective Approach to Raising Capital

Excited by the prospects of investment capital, many entrepreneurs rush headlong into trying to raise the money as quickly as possible. Often, such an approach produces disappointing results.

This usually happens because the entrepreneur doesn't fully understand what will be involved to make it all work. Imagine that you were told of an enormous gold mine laying unclaimed in the middle of a desert. Even though you want the gold, it would be foolish of you to load your pickup truck and race off into the desert without knowing a few things: how far away is the gold, how hot will it get, how much water will you need, etc.

Similarly, before you can raise money from investors, you need a thorough understanding of the steps involved in the process and the resources to allocate. Even simple investment offerings require careful coordination of management, personnel, and financial resources. Often, timing issues place additional pressures on the team charged with completing the offering.
The planning stage of your offering allows you to make assumptions, change your mind, and start over again. You can test various conclusions without having committed major resources and thereby avoid mistakes later. By thinking through the details, you will gain clarity and develop realistic expectations.

In the planning phase, you will decide the type of offering exemption(s) you intend to use, budgets, personnel, and so forth. These decisions should reflect the practical realities attendant with your individual circumstances.

Next: The Offering Process