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Most people who buy a business, and nearly all who buy more than 1 company, will need to raise capital.
There is a lot of advice available about how to effectively raise funds, how to set terms, etc., but the best capital raisers that I know do a few things really well:
There is a lot of advice available about how to effectively raise funds, how to set terms, etc., but the best capital raisers that I know do a few things really well:
- Practice their pitch outside of the spotlight (and ideally with trusted contacts who will provide real feedback) to make it tight
- Create a contact strategy, starting with the easiest people to approach (most likely to say yes or most forgiving in case you mess up)
- Create a contact strategy, starting with the easiest people to approach (most likely to say yes or most forgiving in case you mess up)
- Always ask for referrals to other potential investors and seek as many contact points as possible for high-value, high-potential investors. Keep expanding the network
Once the fundraising is in motion:
- They provide regular updates to everyone who has been contacted
Once the fundraising is in motion:
- They provide regular updates to everyone who has been contacted
- Initially, they create a sense of MOMENTUM. "I'm now 30% subscribed and have 10 more meetings scheduled in the next week...". Also, "Person x, whom you may know, has committed" (If they say you can use their name)
- As things get closer to the end, they create a sense of URGENCY / SCARCITY to get those people still on the fence to commit. "I'm very close to being fully subscribed and setting a close date of X. I'd love to have you as part of the group."
- They don't give up. Rejection is normal, but the best keep going.
- After the fundraising is complete, they stay in touch. They let investors and those people who didn't invest, but hope will do so in the future, know how things are going.
- After the fundraising is complete, they stay in touch. They let investors and those people who didn't invest, but hope will do so in the future, know how things are going.
