Illinois Investment Network


Recent Blogs


Pitching Help Desk


Testimonials

"This is the best money I've spent so far trying to attract qualified investors. I've attended several VC and Angel Investor events over the past year to attract investors and this site has attracted the most relevant and qualified investors so far. Thanks! ~ James Fitzgerald - ChainStar USA"
James Fitzgerald - ChainStar USA

 BLOG >> Recent

First Million is the Hardest [Entrepreneurship
Posted on February 5, 2014 @ 01:45:00 PM by Paul Meagher

I just had an interesting conversation with a client of mine who started up a company 6 years ago and is starting to gain serious traction. He just finished raising a million dollars in the New Year to buy the ownership and rights to a medical device and is $200,000 short of a second million dollar fund raise for operational capital.

He pitched his project to numerous investors during the 6 months before his first million dollar fund raise. He put in many 20 hour days. He had the full amount raised just before xmas but a half-million fell through during the xmas/new year period when an investor had his check book out ready to sign over the money but dropped the bomb that he wanted control of the company (chairman of the board and powers to appoint other board members). He walked away from the deal because he did not go through all the effort to raise money to have the company taken away from him. He was able to find other investors shortly after he nervously walked away from that investor.

One of his take away lessons was that the first million was the hardest to raise. This was in part because it was a learning process to raise the money and he has become more effective at closing deals, sourcing the right investors, and filtering out investors who claimed they were interested but were dragging out the due diligence process too long.

After raising his first million it became easier to raise the second million in part because he established credibility and expertise from the first fund raise and in part because of the traction that the first fund raise created. What he learned from his first fund raise was to spend less time trying to get investors on board by not participating in a protracted due diligence process. If the process takes longer than a month then he politely tells them he has a fund raising schedule he is trying to meet and to contact him when they are ready to move forward. He is trying to reduce the amount of time he spends in sending ever more information to satisfy reluctant investors. He also requests promissory notes from interested investors to get faster commitments so he can move things forward and build momentum for getting the next investor on board. This is not the same struggling entrepreneur I knew a year ago - he is now a well-oiled fund raising machine.

It has been a long process to get his company to the stage where it has traction and can raise money in a more nimble fashion. There were many roadblocks that almost sunk his company before he could get to the stage he is at now, and his company is still not generating much revenue, but things are starting to look very promising and the expertise he has gained in raising funds can be translated into raising funds for other related projects that may require funding. We discussed working together in the future when his second round of funding is complete and he moves into the operational phase of his company's growth plans.

When developing a fund raising plan, you should account for your level of fund raising expertise and whether you have the expertise to close the full amount in one fund raise. Success in a smaller fund raise may lay the groundwork for increased velocity in raising funds for a second or third round. The road to raising funds is not without its stumbling blocks and near death experiences, but sometimes persistence pays off and you accumulate skills you never knew you had until you realize that raising money has gotten a lot easier because of the deal making, investor sourcing, and investor filtering expertise you have may have acquired from the fund raising school of hard knocks.

Permalink 

 Archive 
 

Archive


 November 2023 [1]
 June 2023 [1]
 May 2023 [1]
 April 2023 [1]
 March 2023 [6]
 February 2023 [1]
 November 2022 [2]
 October 2022 [2]
 August 2022 [2]
 May 2022 [2]
 April 2022 [4]
 March 2022 [1]
 February 2022 [1]
 January 2022 [2]
 December 2021 [1]
 November 2021 [2]
 October 2021 [1]
 July 2021 [1]
 June 2021 [1]
 May 2021 [3]
 April 2021 [3]
 March 2021 [4]
 February 2021 [1]
 January 2021 [1]
 December 2020 [2]
 November 2020 [1]
 August 2020 [1]
 June 2020 [4]
 May 2020 [1]
 April 2020 [2]
 March 2020 [2]
 February 2020 [1]
 January 2020 [2]
 December 2019 [1]
 November 2019 [2]
 October 2019 [2]
 September 2019 [1]
 July 2019 [1]
 June 2019 [2]
 May 2019 [3]
 April 2019 [5]
 March 2019 [4]
 February 2019 [3]
 January 2019 [3]
 December 2018 [4]
 November 2018 [2]
 September 2018 [2]
 August 2018 [1]
 July 2018 [1]
 June 2018 [1]
 May 2018 [5]
 April 2018 [4]
 March 2018 [2]
 February 2018 [4]
 January 2018 [4]
 December 2017 [2]
 November 2017 [6]
 October 2017 [6]
 September 2017 [6]
 August 2017 [2]
 July 2017 [2]
 June 2017 [5]
 May 2017 [7]
 April 2017 [6]
 March 2017 [8]
 February 2017 [7]
 January 2017 [9]
 December 2016 [7]
 November 2016 [7]
 October 2016 [5]
 September 2016 [5]
 August 2016 [4]
 July 2016 [6]
 June 2016 [5]
 May 2016 [10]
 April 2016 [12]
 March 2016 [10]
 February 2016 [11]
 January 2016 [12]
 December 2015 [6]
 November 2015 [8]
 October 2015 [12]
 September 2015 [10]
 August 2015 [14]
 July 2015 [9]
 June 2015 [9]
 May 2015 [10]
 April 2015 [9]
 March 2015 [8]
 February 2015 [8]
 January 2015 [5]
 December 2014 [11]
 November 2014 [10]
 October 2014 [10]
 September 2014 [8]
 August 2014 [7]
 July 2014 [5]
 June 2014 [7]
 May 2014 [6]
 April 2014 [3]
 March 2014 [8]
 February 2014 [6]
 January 2014 [5]
 December 2013 [5]
 November 2013 [3]
 October 2013 [4]
 September 2013 [11]
 August 2013 [4]
 July 2013 [8]
 June 2013 [10]
 May 2013 [14]
 April 2013 [12]
 March 2013 [11]
 February 2013 [19]
 January 2013 [20]
 December 2012 [5]
 November 2012 [1]
 October 2012 [3]
 September 2012 [1]
 August 2012 [1]
 July 2012 [1]
 June 2012 [2]


Categories


 Agriculture [77]
 Bayesian Inference [14]
 Books [18]
 Business Models [24]
 Causal Inference [2]
 Creativity [7]
 Decision Making [17]
 Decision Trees [8]
 Definitions [1]
 Design [38]
 Eco-Green [4]
 Economics [14]
 Education [10]
 Energy [0]
 Entrepreneurship [74]
 Events [7]
 Farming [21]
 Finance [30]
 Future [15]
 Growth [19]
 Investing [25]
 Lean Startup [10]
 Leisure [5]
 Lens Model [9]
 Making [1]
 Management [12]
 Motivation [3]
 Nature [22]
 Patents & Trademarks [1]
 Permaculture [36]
 Psychology [2]
 Real Estate [5]
 Robots [1]
 Selling [12]
 Site News [17]
 Startups [12]
 Statistics [3]
 Systems Thinking [3]
 Trends [11]
 Useful Links [3]
 Valuation [1]
 Venture Capital [5]
 Video [2]
 Writing [2]