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As I write this I first want to clarify I am in the middle of the process.

I just wanted to share some of the experiences I am having in fund raising and pass along some hard won advice on raising investment capital.  About a year ago I decided to start yet another internet company.  The site is called www.showbusiness.com.  I have been involved in the tech industry for over 25 years and felt my "expertise" would be a no brainer to create this "paradigm shift" for the entertainment industry.

So I went ahead and spent some monies and started the design and implement of the site.  I found a great Advisory Board(founders of the parent company of MySpace), I was able to bring on board a tremendous management team(e.g. former President of Marvel Entertainment Studios) and with great confidence I proceeded to develop a Business Plan for bringing in Angel and Venture Capital.(initially I had created an Executive Summary to show to the people I was recruiting plus the site under development). btw - I had convinced all of the management participants to take equity in the company so I did not have to pay them till funds were raised(except for myself, they all worked part time).

So here I am a year later with 25 years of experience and what I felt were all the right answers to all the possible scenarios I might foresee in raising the capital. Now this is where my journey of pain and reeducation began.

The problem always seems to start with myself.....(and my ego) the first rule of thumb is the following:

Write out a PLAN on exactly what the market and direction of the company is. (I thought I did that), this means DEFINE in a short concise statement, what it is that you do(again I did not do that).  Then when you are ready to raise funds create a document that lays out how the funding for the company will be aligned directly with the company`s overall strategic plan.

What does this mean? It means EXACTLY how will the money be used...down to the penny and with the funds what will be the strategic objectives met. I of course with all my YEARS of experience DID NOT DO THAT, I gave a general use of funds with a general strategic direction and the reason I did this is because I felt that to explain it would be to tedious for the investors.. ..WRONG.... I now know (and should have remembered) by doing it correctly it serves 3 purposes, it demonstrates to investors, venture capitalists and lenders that I have done my homework and I have researched its growth potential, industry and competition to the nth degree. The second is that this (the Plan) will be a road map that I will use to build the business(and a general plan does not do that) and third, it can show the proper types of financing I need both now and later, which is important to investors as they want to know that the funds you require now will carry you over till you reach your goals.

I made certain assumptions based upon my experience that were wrong, I had gone to investors I have known for over 20 years and figured they knew that i knew how to do the business.  The mistake was in thinking that...regardless they want to see it written down(precisely) so that even though they know..they want to make sure that I understood the details absolutely required to create and run the business and that I would be traveling the correct path.  They did not want to know it was all in my head, because what good was that to everyone else.

I went into a presentation with one of the top tech funders out there and along with my glorious team made what I now know was a half butt presentation.  Yhe Investor(thank goodness he was a friend) said it was the WORST presentation he had ever heard and that if he had not known us he would have walked out within the first 10 minutes. (on an up note afterwards, he did say even though the presentation sucked, he did think we had a winner)

So here I am on my 15th reedited plan and I am heading up to  San Francisco to make yet one more presentation in the hopes that I have gotten it right.  Some of you may say..well if you had a site that was generating income and had lots of traffic and was growing, then getting the funds would be no issue..I thought the same thing...What I am finding out is all Investors are People and they want one thing and that is to know that you will minimize the risk to the greatest degree possible and your Plan is one of those ways of showing minimizing their investment risk.

If you are interested to hear more of my journey as I go forward then please post..if not I will stop my rambling...

I removed the Flash Presentation as it did not have a Pre Loader and therefore caused issues.  My apologies.  I am adding a Pre Loader, once that is done I will post it for those that wish to look again. Thanks.

Dear 24Hour Entrepreneur,

First things first - I followed your link and:

1. The presentation stopped in the middle
2. My computer froze and it took me about 10 minutes to reboot.

I`m not sure if that was on your end or mine - but it is the first (and hopefully only) time I`ve had this happen during a flash presentation.

Secondly, the message seems to be directed at the artist/performer which is great. However, an investor may not readily identify with it.

From my experience and observations, investors are not a homogeneous group- even among the "professional" angels and VC firms.

They do share some common traits - among them are:

1. Risk vs reward.  Every investor I`ve met wants a return commensurate with their risk. As you said - anything you can do to reduce their the risk is important. In practice, I`ve found that it really is about their "perception" of the risk - which may be far different than the real risk..
2. While they may be enamored with the idea or the technology - ultimately they recognize that execution is the key.  They believe the old adage -"A good plan well executed is far more likely to produce success than a great plan , badly executed".
3. In most situations, they will bet on the jockey - not the horse. It`s usually the team that is the most important and final criteria for an investor. However, in early stage companies, we find the following two conditions exist:
1. The investor resonates with the "problem" being addressed
2. The investor "connects" with the entrepreneur/team

I appreciate your sharing your experience and hope to hear about your ultimate success.

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Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

Investors tend to be pragmatists, where artists and entertainers tend toward being idealists. There are fundamental differences of paradigm between the two. The solution is to find the reconciliation points.

What aspects of the entertainment business lend themselves to pragmatic (realistic) analysis? Such things as management, bookings, sales, completion deadlines, staging, logistics, and so forth.

The bigger problem is to ask what aspects of the business investment world lend themselves to idealism? Very few! :-)

I want to thank you for the information.  I will  look at the Presentation as well.  I will also try to post my plan in a URL for those that would like to comment on it as well.

Dear 24 Hour Entrepreneur,

Thank you for sharing your experience in the fundraising department; I am sure this information will be very helpful to a lot of people. I visited your presentation page but I did not stay long enough to watch the entire presentation. Your flash program kept freezing up; this is extremely frustrating to a lot of viewers, myself included. Perhaps you can find a way to resave your presentation in a smaller file without losing too much quality. I have a high speed connection and experienced difficulty; this makes me think about the viewing pleasure of those with a lower speed connection, including dial-up.

I also agree with Robertj, I think the presentation should be directed more towards the investor.

I wish you much success and look forward to hearing positive results from your venture.

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Claddagh Publishing
Claddagh Ltd.
Your First Choice ~ The Right Choice
CladdaghPublishing

I am in the conference as I write this.  There are 36 presenters and 34 are publicly traded companies( we are private). At first I thought we were in the wrong conference because they are institutional investors but now after going to the mixer last night realize that many of those representing the Funds also have a personal interest in small and unique startups.  I will be presenting in a few hours from now(Monday 10 AM) and will post afterwards.  I took some of the comments made and incorporated them into the slide presentation.  As soon as possible I will post it as a URL(and make sure it works) for those that wish to look and comment.

 

Frank

Hi Frank,

I have my fingers crossed for you; looking forward to hearing good news about your presentation and your funding.

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Claddagh Publishing
Claddagh Ltd.
Your First Choice ~ The Right Choice
CladdaghPublishing

Being fat in New York isn't easy :). I usually wonder sometimes that who has the right of way to go first through trains' door in the penn station. 

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Some real good and nice discussion being going on here. Really a good read for newbies like me.

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