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Sep 26Tom Matthews

Raising money? Don't make these mistakes.

Sep 26Tom Matthews

The subject of my posts are always based on real life experiences I have.  I just met a potential new client that gave me his investor presentation.  He made all these mistakes.  Raising money is probably the number one reason people first call me.  So I’ve seen it all.

You forget to tell the investor what you want.  I cannot tell you how hard I have to search through documents trying to figure out what you need.  And the worst is ” I need 75,000 to 100,000.”  You can’t do that.  You need to tell the investor very early and very succinctly what you are looking for.

Your Bio is missing or not adequate.  Any investor is investing in you first, then your project.  You need to build great confidence by having a great bio.  And don’t assume that you can cheat on this because your potential investors already know you.  When you write the bio think of the reader as someone you have never met.

Forecasts are made without describing the assumptions.  Excel is a wonderful tool and every single proposal ever made has more than one imbedded in the document.  And every forecast has sales and profits growing in leaps and bounds over the next couple of years.  But you forgot to tell us how sales can grow so fast.  Explain your assumptions.  If sales annual sales growth is 35% per year and your industry is growing by 7% per year, you’re going to look silly.

You forget to tell the investor what he’s going to get.  A proposal that came across my desk last week said “if you give me the money, I will double your money.”  No one will take you seriously if you say something like this.  You need a section in the document detailing how the investor will be paid out and what events need to occur before he is paid.

You do not include any proof of concept.  Why will this work?  The investor first wants to make sure he isn’t going to lose his money then he starts thinking about making money.  What proof do you offer that this will work?  Have you done it before?  You are asking the investor to trust you, believe you but you offer him no evidence that backs up your claims.  You need to fix this.

You don’t add in the disclaimers.  I am not an attorney and will not give you legal advice.  But I will tell you that you must describe the risks the investor is making.  He can lose all his money if he invests in you.  Full disclosure demands that you talk about this.

You present an ugly document.  This document is representing you.  If you take a meeting with a potential investor, you should not show up in shorts and flip flops.  In the same way, this document needs to be dressed up.  Bound, organized, table of contents.  Show the investor that you respect him.

Please fix these mistakes.  The investor may or may not (most likely will not) tell you the truth of why he says no.  If he does have the money then his no means he does not trust you and does not trust the document you gave him.  Give yourself a fighting chance and do this right.

B2B CFO®

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