Raising Capital for Your Business Part II

Leo expands on last episode and goes over how many investors you should talk to, what does raising capital in your business look like, and how you prioritize working IN your business vs working ON your business.
Prefer to read? (Transcript)

Speaker 2 00:13 Hey everybody. Good morning, happy Saturday to you. My name is Lee Yolanda Verde and you are listening to business and legal talk with Leo and Claudine and this is my second installment of the racing capital for your business. Yes, this is part two. Last Saturday we talked in length about private equity and loans and I got some great feedback and we’re going to continue because it’s such a hot topic but enough about that. How are you, how are things going in your business? How is, you know the summer treating you are, you know I his this summit allowing you tend to think about your business. You know how you always tell business owners look,
Speaker 0 00:59 okay,
Speaker 2 01:00 there’s two types of engagements. When you, when it comes to working on your business, you know what is either going to be working in your business or is it going to be working on your business? What percentage of your time are you spending every week to work on your business? Meaning whatever you need to do, rather than practice being the practitioner and your business actually performing or even selling the product or service that you actually make a living on how you’re thinking about growing your business in the strategizing about ways to leverage and grow to the next level. You should be spending at least 20% of your time doing that. And if you’re not doing that, then you need to call us, huh? So what was what we do? We help you really, we really in love in love, just love, absolutely love helping businesses grow and go to the next level by providing advisory and intelligence and accounting solutions. That make sense. So check us out, www.greenandhq.com and here we are. So we got a lot for you today. Just like last week. So just a little recap. Last week we talked about the types of investor funding, equity loans and convertible debt. There was not enough time to talk about all three. That’s how much it was today. We continue on and we’re going to talk about how many investors should you talk to if you’re actually raising capital, what does that look like
Speaker 2 02:35 and how do you prioritize? So if we have any enough time after that, which I doubt we’re going to talk about a wasted increased the value of your company, I wouldn’t that be exciting. So, uh, without further ado, let’s get going.
Speaker 2 02:56 So this is the par when we start talking about what that actually looks like, what are the mechanics behind raising capital and the metrics that you should be looking out if you’re going to be talking to investors, how many, you know, how many does it take? How many meetings does it take, et cetera. The most important advice I could give you before you set up in your fun, put your fundraising hat on, is to understand the racing capital is a sales and marketing process that needs to be managed. So let me say that again. Racing capital, it’s a sales and marketing process and it’s a full time job. Somehow though many first time founders think of sales as something that is beneath them, all that couldn’t be farther from the truth. This is what I say an investor’s job is to deploy capital and make a return. If you truly, if you truly believe that you and your company and your products are exceptional and your company will be valuable, then you’re actually doing them a favor by helping them invest in your, in your company. If you don’t believe in your and your deep within your core that you have an amount that you’re amazing and there is no wonder you don’t want to sell to make an investment.
Speaker 2 04:33 So like any cell, and this is where you need to just, this is the paradigm shift for you. You can’t delegate racing capital.
Speaker 2 04:45 You have to be involved. Even if you have somebody helping you by the hand in preparing the collateral materials that you need. The, the pitch, the presentation, you know that the pitch deck or the deck presentation, uh, the famous, you know, PowerPoint that goes to the investor, you need to be involved. The, that you can be a hands off approach in this. So like any sale, what do you need first prospects you need prospects and qualify whether or not they’d be a good fit for your product or service. What is the product and investment in your company? You need to figure out, you need to figure out how much time to spend with each prospect and you need to rigorously manage your time in the calendar. This is where most funders make no mistake. Most founders prepare a deck, right? The deck presentation, the PowerPoint, ask a few friends and investors whom to meet, get a few introductory reductions and just wing it. As a result, founders often meet the wrong investors waste time. Those who ask for more information. So I’m going to here, I’m going to help you today to kind of want to walk you through the typical VC process and I hope you find that helpful.
Speaker 2 06:10 So you start with the initial meeting. So there’s the typical VC VC process. There’s the initial mid in the followup. So they say that there are three rules in property, right? In real estate, which are location, location, location in sales that are so three rules qualify, qualify, qualify. Your entire process should be about testing whether your prospect, you potential financial partner, your investor has any interest authority to make the decision, the budget and it’s willing to continue spending actual time with you and analyzing you.
Speaker 2 06:59 You know, you can, you can say that like the engagement period interests, authority to make a decision, the budget and is willing to continue talking to you. So if you’ve got those four, you’re on the right track. If an investor isn’t engaging, then they’re not suddenly going to get, you know, if they’re not talking to you, all of a sudden you’re not going to have a term sheet, which is, you know, short speak for the actual document when they actually dictate how much money they want to give you. And what the terms of the, you know, of their money. Is it that we, we call that the term sheet. The surest sign of fundraising process has stalled or basically gone dark is when you’re not, you are getting followup meetings or hearing from VCs or hearing from France that they got a phone call asking about you. If engagements go South, you either need to move that we see to our lower priority or you need to find ways to improve any of those dimensions. Obviously points two and three might mean that you’re meeting the wrong person in the firm. You know the authority to make a decision and they have the budget for it. Moving a VC from an a to a B doesn’t mean that they’re still your top pick
Speaker 2 08:18 images means that your chances are less likely and your extremely limited resources should be allocated elsewhere. Remember, you’re trading time to do this so you better have a sniper’s approach to actually look and who you’re going to. You know, who are you going to engage and this is easier said than done. So how many vessels should be UBI talk is speaking with. Ah, great question. Of course there are no exact number of ECS you should meet. What I’m giving you is basically some guidelines. But for simplicity sake, let’s just say you raise um, some money already from angels or seed investors and your either raising an a round or a B round of venture capital. Now, before we go any farther, I have to explain what that is. Seed. Okay, well hang tight. We need to go to break, but we’ll be back and I’d be happy to explain it. Stay tuned. You’re listening to business and legal talk with Leah, Claudine.
Speaker 1 09:43 .
Speaker 2 09:46 Hey everybody, welcome back. So before I was rudely interrupted at the last by my, my awesome producer, I was about to tell you what, you know, people talk about, yeah, I’m raising a series a or B or C. what the heck does that mean? Right? Well, it starts as seed capital, right? Seed. You’re going to hear it as seed, you know, as in, as in a tiny seed of mustard. Uh, in the, probably the easiest way to explain it is if you are building a product and is easier to explain in software, if you are building what we call the MVP, the minimal viable product. And you need money to finish the product. You looking for seed capital. Think about the, you know, the, the founders at Google back in the day long before they were the bit was the big money coming in from all other VCs or angels or private equity, etc.
Speaker 2 10:51 They had, they were trying to build a product and I believe that they got about a hundred thousand dollars to kind of um, build a prototype model of what Google eventually would become. And what they got at the time was seed capital to give a, you know, an idea to give this product a chance to kind of come to life. So you’re going from the whiteboard into an actual a prototype. If you have finished your product and you need to go create a repeatable way to acquire customers, then we’re talking about an a round as a letter a for Apple. So once you have a repeatable way to acquire that customer, Sirius B usually comes to really take that to the next level because then you’ll know by then what the lifetime value of a potential customer is versus the cost to acquire that customer. Where we call the LTV over CAC, the lifetime value of your customer over the cost to acquire that customer.
Speaker 2 12:03 So if you’re, if you’re spending about a thousand dollars to acquire a customer by day and the lifetime value is 5,000 it’d behooves you to keep, you know, the, the return is five X five five times. So he behooves you to keep pumping money and then you have, every time you put $1,000 you’re going to get 5,000 and then you already went through the seed round in the a round and you’re prime candidate for B round and you’re talking about, you know, 10 15 $20 million depending on the valuation your company. So with that said, my assumption is that you’re actually looking for somewhere between seed and a, and there are those hybrid companies that are being bootstrapping their business for a decade. The never taken any capital, but the product is not quite finished, but they’d been doing well, but they actually want to finish the product. But they’d been around for a while and, and have a lot of revenues. So they have a repeatable way to acquire new customers yet, but they haven’t finished the product. So they are between a C, you know, seed and a, so I like to start with approximately 40 qualified investors.
Speaker 2 13:07 If you don’t know
Speaker 2 13:10 what a qualified investor as well as a com, you know, it’s basically, you know, they have the right size in their fund, that geography, they are located in, in an ideal geographical area. So if you’re in California, you’re looking for California and if you’re looking for an a round and um, and that, you know that the a round will be three to $5 million, you don’t want to be going to VCs that are specialized in B rounds. So the size, the geography, if you’re a software, you don’t want to be looking for VCs that have a flat, uh, particular, um, um, immunity to healthcare or logistics or it. So industry focus is important. The capacity available also. Um,
Speaker 2 13:58 you know, and then they sell flat race, a new fund in the last three to four years or so. They have the actual capital ready to be deployed. So if you’re raising a round where the new lead investor would invest 5 million, the VC fund MUN must have no less than a hundred million if you look in for them to write a 15 so, okay, so let me say this again. If you’re looking for about 5 million, the size of the fund, where those monies come from, it’s about 500 Emmons is about a hundred million. So typical, the typical size fund will accommodate somewhere between 2030 companies. But if you’re looking for more than that, more money, we’d talk in 15 $20 million will, the size of the fund has to be an excess of 400 million. So you don’t want to go looking for a $5 million investment in a fund that deploys 15 to $20 million at a time. You won’t get the time of day. There’s no such thing as a general practitioner when he comes to VCs. They’ll have a specialty. Um, you know the, there’s hybrids out there, but you know, I don’t want to spend too much time on that.
Speaker 2 15:19 So as far as stacking,
Speaker 0 15:21 okay.
Speaker 2 15:23 You know, I F I if you’re thinking, you know, remember I asked you to put your, your thinking hat on, right? If you’re thinking in terms of a BS and CS, right? You should have about eight to 10 that you consider ACE that the prospect, they have the right size, geography industry focus and they have the capital to deploy and they’re talking to you. You should be talking to at least eight or 10 of them. You should have eight to 10 that are also BS. Why not an a? Because they either they are interested but they don’t have the right size of the fund. Or they can introduce you to somebody but they’re really interested in your idea. Or they are because they are in California but they don’t have the interest in software, etc. They could be a multiple variations of the same thing. So
Speaker 0 16:13 okay.
Speaker 2 16:15 In a, and then it goes, you know, the issue, you have the balance 20 to 24 of the 40 should be CS. So ABCs, right? 10, 10, 20, uh, in a, as somebody who would likely be likely to invest in a company like yours. And if chosen as somebody who’d be interested in working with, okay, so in a is somebody who would be likely to invest in a company like yours and if chosen you would like to be working with them as a symbiotic relationship. Think of it as a marriage. You’re going to be stuck with each other for a while, five to seven years. You better like each other and be able to, you know, work with each other and be able to have the same vision for where you’re trying to go. If you’re not likely to get like Sequoia, which one of the largest VC funds, then just because they’re an amazing friend doesn’t mean that they should be going in your a list. Remember what I say? You got to qualify, qualify, qualify. Ideally you want to start with those VC firms that have an appetite or to have invested in, in your industry, particularly if they had invested in competitors.
Speaker 2 17:26 You know, they understand the market, you know, they understand the industry and they understand the metrics and they’re going to give you a realistic valuation. So, um,
Speaker 2 17:43 let me put it into this way. So if in high school you got a 3.6 GPA as not bad, right? I a decent GPA, you might want to go to Stanford, but it is unlikely. So you spend more time and energy in schools that you’re most likely to get into. The same with the VCs. If you don’t have an idea that is gonna revolutionize the world and you know it and everybody knows it and you don’t have an amazing track record and your founding team were, all of, all of you guys have come from another companies and you can, you have a terrific management team with a terrific idea or even a terrific management team with a mediocre idea. VCs will spend money, they invest in people, not so much an idea. You know, funny thing is I’ve, I’ve heard of people, of, of, of founders looking for VCs that want to have the VC sign an NDA, a nondisclosure agreement, which is a deal killer. VCs really had no interest of taking an idea and do something with it because they’re not, that’s not their business model. They invest in people. So with that said, a mediocre idea with an amazing and awesome management team will get funded. A great idea with a mediocre team will not get funded.
Speaker 2 19:09 So the AE firms, the ones that a, you know, capital a are the first thing you’re going to work the hardest to research, hardest to find high quality introductions to make the most effort to engage with. By the way, sidebar, there’s plenty of technology and websites that actually cater to people who are looking for capital, would actually have this CRN models. One of them, I, I’ve, I’ve been researching that it actually helps you create and the touch points and the sales cycle for reaching out to these VCs. It’s really, really cool. It’s like Salesforce for vis, you know, for people who are looking for capital. So you’re going to work the hardest to research. Hardest to find high quality introductions and make the effort to engage with. To be clear, you list is not static, is going to keep changing. People are going to become an in and out. If you have a mediocre man with a high quality prospect and you don’t think they’re likely to lean, then drop them to B or C and move on. Likewise, likewise, if affirmed that you don’t think is a topic suddenly starts engaging and doing work and showing that you showing you the love, you might put him as an a because an offer is important.
Speaker 2 20:30 So you start with some safety zones. Good question. So there’s some debate whether you should ever test dry with a few firms before a wider process, uh, or whether you want to get your toes wet. Some firms that you think, ah, you know what, if I blow my pitch, they’ll be fine because I’d really don’t want to get any money from them. People who believe, the former believed that you should see the market event before. Too many people know that you’re in the market. I think there’s some truth in this. So I don’t think you should. Um, my personal advice is that the first take the first two meetings as you know, getting rid of the jitters, sort of your test drive. Does that make sense? So the first two meetings is like, well don’t waste the meetings is just, you’re not probably not going to be at your best. So that gives you good practice. So you know, if you were to, if you were to come up with your list, take a couple of people from your C list that you know that chances are remote to fine tune your pitch. That gives you the practice for your AA meetings and you’ll have a sense of the likely questions, comments or concerns.
Speaker 2 21:59 Then begin your processing as quickly as you came with the up to a two turn firms that you are labeling a right. So does that make sense? So I know I’m asking you to do a lot of work and this may be heavy. So if you’re just driving around and you’re like, what the heck is he talking about? Well, I’m talking about racing capital for your idea. I granted we are in the middle of, in the central Valley, we’re out in California, which is really a hotbed for technology and here in the central Valley, your equidistance between San Francisco and LA, chances are that you know, somebody who works for a technology firm. That’s just the way it is. So I think this is good education for you and it’s an option if you ever want to raise capital for your business, well don’t reinvent the wheel. Just call us or email us. Go to www.greenlandhq.com anyway, so to be in the process, you start with about a to turn firms. There’s other ones that you’re likely want as your partner partner to partner up with you and give you the money and also have a real possibility of landing them.
Speaker 2 22:58 So far, so good, right? Keeping an eight to 10 helps you manage the public information flow because there’s going to be a lot of information back and forth. So, uh, you can hit a broader group in a few weeks and then you can, time is such a such a way, right? So you can hit a broader week and you know, you can, you can time it and you can use the CRM to do so. But right now we’re going to go to break. Um, we’ll come back and we’ll keep getting into your listening to business illegal talk with Leon, Claudine
Speaker 3 23:24 .
Speaker 1 23:39
Speaker 2 23:50 all right, we’re back. Are we having fun yet or am I the only one having fun today? That’s this, this, I love this topic. I believe so much in it. I’m constantly involved. This is what I do every day. Helping companies grow by raising the capital that they need to get to the next level in their business. So if that’s you, then you need to listen to this show right? Long before you go and looking for capital, you need to know H, you know, do you have a viable idea as you idea bankable? Is your business profitable? Are your financials in order? Do you understand how to approach those people that you’re seeking to fund your business, whether it is banks or VCs or convertible debt or family and France. So that’s what we’re talking about. You have to be a student of the game. You have to understand your business, you have to know your business, you have to be able to recite knowledge about your business and many areas, sales, marketing, financials, et cetera. You have to understand it because if you don’t understand in how your specimen else to understand, and that is partners, customers, vendors, people that are going to finance your business.
Speaker 2 25:09 So one of the most important, so we keep going on this a, B, C, and you know, raising capital because this is something that I’m currently engaged in and it’s kind of a fascinating topic. You know, helping companies rate cat raise capital by selling a portion of the company, a minority interest in their company so they can get to the next level. You know, the reason is this, do you rather own 100% of a company that is worth nothing or 40% that is company that is worth millions. You’ll be the judge of that. Some people have an aversion of visceral reaction when they think about partying ways with the inequity. And I get it, I totally understand it. And I have felt that way before and I have been on both sides of it on the court. I have raised capital and I have raised that and I’ve helped companies raise capital as well.
Speaker 2 26:07 So I get it. But if you have an opportunity before you and the marketplace, you gotta, you gotta go after it. If that’s what you want. If you want to have a lifestyle business and you’re making tens of thousands of dollars a month and you don’t ever have to set foot in the office, but when I’m permanently turn off the radio, this show is not for you. But for the rest of us it’s good to have access to capital. So we’re talking about having a to 10 VC firms and different stages, you know, eight to 10 firms. And a round, Oh, I’m sorry, eight to 10 firms and what we call a in labeled as a about 10 firms labeled as B a in about 20 firms label us. See, well why not three or four rather than eight to ten one of the most important Ames, a capital raising process is to keep similar firms on the same stage of your process.
Speaker 2 26:59 So if you’re talking with too small of a set and one leans in early and offers you a term sheet and you’re not sure this, this is the firm you really want it to work with, is incredibly difficult to slow them down to say, um, well we, we really need to finish our process and we’ll get back to you as you run the risk that they feel played. Think about it, right? It’s like dating. If you show too much interest in somebody, you’re going after romantically and then you decide, Oh, you know, I’m just going to test in the field. I’m not quite ready to commit within the other person. Find that offensive. Same thing, right? Feelings get hurt, then you only get one chance. So you don’t want to burn your bridges. So any investor has feelings, believe it or not, who an investor who doesn’t feel like there is a two way commitment. We’ll eventually walk and look for deals to perceive as a better two way fit. Just a bears repeating. You gotta be ready to commit if deal makes sense. And if it doesn’t make sense, say so. A VC of course,
Speaker 0 28:16 yeah,
Speaker 2 28:17 they want the only to come and see them because that means they have no competition. They understand that there’s going to be competition, but they don’t want to be played for the sake of being played. So I think the, the easiest way to put it is you have to look for people who think like you talk, like you walk like you, I basically your avatar, the difference between you and them, they have the money and you don’t. So there is a lot to say about people that have it. There’s a lot of trust that goes into parting ways with Capitol. You taking Capitol and them given away their capital is risk. As I said before, only a small percentage of firms of businesses actually become profitable. The gave the kind of returns that the VCs are looking for. Only one to 2% will give the five X return. The become the powerhouses, the unicorns, the rest will give returns some even two to three times, but not quite. The home runs.
Speaker 2 29:29 It’s best for his best one is a warm introduction. If you know somebody who knows somebody, that’s why I didn’t know this. Networking events are powerful. If you’re looking raise money, you need to go to this events when there are all the VCs are there and you’ve got to shake hands. You got to commit the time to go to where they are. You don’t want to expect them to come to you. How do you know if a VC is engaged? Well, the first meeting is usually with one or two people within the firm. Usually the associates, right? The, the um, the, the first line of defense. Those bright young men and women who graduated top of their class in the Ivy league schools who are savvy. They know the data and they are scouring the world looking for those prize companies that can become the unicorns.
Speaker 2 30:23 So you’ll start meeting with, you know, you’ll have, you’ll have a meeting with one or two of them and the VC firm that you are in, you know that you’re pursuing. And so you might start with a partner, uh, who actually may be a principal and an associate or just two associates, who knows, right? In any event, there is a screening meeting or an introductory meeting to the firm. It is hard but not the heart to get the first meeting for a talent for , you know, for, for a talented founding team who hustle. If you’re hustling, chances are you’re going to get plenty of those introductory meetings. it is infinitely harder to get a prompt second meet and do the rigorous time management on behalf of our VCs, VCs for the record, we only grant you a second meeting in nine to 10 months to hear a progress update. So once they give you the money, they’re just not going to see you all the time. They made request that you give them, um, orderly financials or have the occasional talk but not, don’t spec a lot of handholding. Many VCs will appear to be super friendly at first in the first meeting because they are there to learn and get to know you and to see if there is an upside.
Speaker 2 31:53 Yes, some of them can be jerks, right? But, but that’s just the way it is, right? The warm list, the warm is friendliest and yet most direct see is the one that is going to be straight upfront with you and is not going to waste your time. Now there are some like that, most of them are just boom, give you the introductory meeting, but they just want one followup. They just go co they just go Stu. Right? I, you know, VCs are often friendly in the first minute because, uh, th th they just realize, Hey, you know, this is part of, for what we do. So, you know, we realized that a, you have to meet, you know, is basically meet and greet people and kiss the babies. That’s VCs. It’s as part of an um, it’s in some ways like a public service that they do. They want to meet with funders. Even that may have very little interest, but that’s what they do. It’s also a political thing. How do you know if somebody is super engaged? the seep. The simple easiest way to know if a VC is engaged. If you, if you get a second meeting, if that happens, if you get a follow up phone call or an email, you know they’re actually engaged. No VC spends more time evaluating your company unless they know that they at least have some interest.
Speaker 2 33:30 There’s a simple processing. Your job is to look for buying signals. Remember, qualify, qualify, qualify or their signs of engagement. They ask you to meet with portfolio companies. They want feedback on your product or you, right? They want a check. They want them to check you out. They asked you to meet our colleague. I set up a call to go through the product demo, financial walk through whatever you know to speak with customers, et cetera is not necessarily an engagement. If they ask you to send a bunch of financial information under the guise of doing analysis on your firm. You know what I mean? So you have to know those buying signals. You have to know when they are not with you and when you should stop spending your time with. And remember, you only have so many hours in a day and you can only do so much. Okay, follow me. So is this helping you, you know, as in everything, one thing I’ve known and one thing, one of the main reasons I love entrepreneurs is because I am one, we are the most relentless bunch of people we take. We don’t take no for an answer and we’ll keep trying until we figured it out. You’re mindset in all of this.
Speaker 2 35:10 It’s 90% courage and 10% knowledge. Get the people to help you get through the doors. So, uh, hopefully that helps. You know, and this is an exciting time. I know we need to cut to break, so stay tuned and I’ll bring it home. So you’re listening to business and legal talk with Lee and Claudia. We’ll be right back.
Speaker 0 35:33
Speaker 1 35:52
Speaker 0 35:53
Speaker 1 35:59
Speaker 4 36:09 alright, gosh. Can’t believe it. We’ve been talking about this for 45 minutes straight and I have so much more to talk to you about.
Speaker 2 36:19 We racing capital. The topic of today is how many investors she had talked to when looking for capital. I’m not talking about banks today, I’m not talking about getting money from friends and families from friends and family or any other source except venture capitalists. So this is exhausting. There was a lot of information. So, um, I’m trying to bring it home for you. So, um, so what have we been talking about so far? We’ve been talking about lining up about 40 people, 40 firms that you think are going to be able to get you to where you need. So
Speaker 0 37:13 eight to 10
Speaker 2 37:16 labeled as a case, about 10, eight to 10 us BS intend to 20th seas. And that seems to be the formula that works.
Speaker 2 37:28 So, um, okay. Some easy hacks to get in front of a VC. Again, if your process stalls. Okay, well number one, have then meet Keem uh, key team members. They haven’t yet met, particularly if these are people whom the VC will want to know regardless of whether or not they found your company, key members of your team, right number to show a demo of your product that is yet to be released. This requires you to be disciplined and assured that in, in short, that is not too early in the process. But a quick message to VCs that says, Hey, I’d love to show you something really cool. New features were built and that we haven’t shown to the market yet. Can I get 20 minutes to swing by? It’s a good way to engage. Number three. Sometimes I encourage teams to create new analysis on um, future revenue projections, competitor reviews, pricing studies, endorsements, any information that creates a compelling next meeting. It’s worth doing with some preplanning. You might even know what information you show in your first or second meeting, what fragments you have for a followup meeting. Number four, any other idea? Um, I’m sorry. I know that idea is to ask whether that it’s okay to meet another member of the VC firm and I one on one session to show them the product. So you get another person who is going to be an advocate, hopefully an advocate that can keep pushing your dealer, you know, forward.
Speaker 2 39:03 You can just ask for a generic person. You have to uh,
Speaker 2 39:10 B a named indie. If somebody else by name that you know in an effort to expand your, your, your, your Rolodex and know that fan and know that advocate on the firm due diligence meetings are the hardest to secure because VCs of course know that this followup is create obligations for them. And if they are balancing five potential deals and they have decided which, whether it or not you’re a fit, then they don’t meet again easily. As a result, many entrepreneurs stayed the easy route of taking new first meetings because they’re easier to get, easier to prepare for. You early have a deck presentation and they feel like progress. Frankly, this is like running a sales campaign and when your last big push to portray them for disparate departments go back, um, and it starts feeling difficult. So when the process of selling becomes difficult, then you start working in and selling to other customers is you gotta work your leads to yes or no. And I know it, it gets inconvenient and I know it gets hard, but that’s what I said at the outset. Raising capital for your business. It’s a full time job and it’s a sales job. You got to put your sales, your sales hat on. Okay. The bottom, the bottom of the end or the bottom of the funnel is hard, pretty hard.
Speaker 2 40:44 So, um, I hope that helps. Um, here’s another thing why you need to keep feeding the top of the funnel, right? Remember we talk about this funnel and raising capital as a sales process.
Speaker 2 40:57 So in some cases VCs lean into a deal, do tons of work and seemingly get so interested that they seem about to submit a term sheet only to have them say no at the last minute that happens. You’re leaning on the deal. Was slightly sincere, his interest in you and you possibly got shot down when you seek an approval. The problem with putting all your eggs into one basket is that if you get a no, then you don’t have a well established pipeline and if you don’t have a well established pipeline over the deals, you’re not having to go back to square one and you’ll have six to eight weeks, which can be existential, which could kill some startups.
Speaker 2 41:43 So let’s, let’s kind of wrap it up. Fundraising is a sales and marketing job in a process which the buyer is a VC and the product is why equity in your company, any grey sales and marketing campaign begins with a myth. Myth, methodical planning in any great processes run with rigorous time allocation and the most on the most important prospects qualify, qualify, qualify as what I’ve been saying, because many startup founders view running the business as their only job and view fundraising as something they are forced to do every 18 months. It often doesn’t get the time, attention and resources it deserves. It’s true. The fundraising is his own rye will make you successful by being successful at raising capital can give you the distinct advantage in the market against your competitors who are in as good are getting finance as you or have to spend more time in the market.
Speaker 2 42:41 You got to plan accordingly. Capital raising is a urine activity and never ends place a small amount of your monthly time allocation for this task outside of capital raising periods, it should still be at least 15% of your time as a CEO. If you are the CEO of your own company, your number one job is to continue to expand your company, increase the typeline and keep making sure that your company is well funded and a lot of people don’t think about that. They think, well my job is to continue to perfect the product and making sure that the marketing and the branding and it’s great and they take their eye off the financials and CEOs that are not sure how much money is owed to them or how much, how, how long before they run out of cash. That’s not just the CFO’s job. That is also the CEO’s job.
Speaker 2 43:37 Yes, the CFO for the companies that can afford a CFO, uh, can assist them with that but the CEO is not in that should not be um, ignorant of that on end when a company is going to run out of cash. So if you, if you are a company that is growing, that is generating cash that if wants to figure it out, how to take advantage of the opportunity in the marketplace, you probably need to come to Greenland and need to look, look us up, go to Greenland hq.com and I’d be happy to just talk to you and anyone on my team will be happy to talk to you about, you know, whether you are a likely candidate for venture capital if that’s what you want. But we love doing it. And uh, and this is, you know, this is what you need to do. You need to just keep looking for ways to improve your product or service. Continue to, regardless of whether you ever get funding for your business, you should have a business that makes money. I always say, I always say that if you don’t not build in a business for profit, if you’re going to have a very expensive hobby and who wants that, you either running a profitable business or you run in an expensive hobby, you choose. Thank you so much everyone for tuning in today. I hope you had a blast. I had a blast. We’re missing your Glodean by it. She’ll be back next week and you’ve been listening to business illegal talk with Leo and Claudine. Have a great weekend. Everybody.
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