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.