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Listbuilding and Storytelling essential with Early Stage Capital Raising

When have you needed money before?

Think back to when you were a kid and you needed money. First you worked out how much you needed. Then you worked out who your targets were. Maybe Mum or Dad or a relation or perhaps an older brother or sister. You made a plan.

  1. You worked out how much you needed
  2. You made a mental list of who might help
  3. Then you worked on your story and when you would tell it.

Its basically the same when raising capital but with an independent and proven Capital Raising Platform you can usually do a lot more than you could with you and your accountant, meaning …

  1. You can raise more money
  2. Your “list” can be larger
  3. Your story can be told by other story tellers as well

However lets start with an activity you did as a kid.

Starting with a pen and paper, make a list of the people who are impressed by your business. Every good business has fans! Afterwards they often are very grateful that you thought of them as part of your company’s future.

Friends and family typically provide smaller amounts of capital on the basis of relationship rather than on the basis of financial rewards. Larger amounts though depend on many of the pointers in this article.

In addition to Friends, Family and Fans, look outside your business sphere of influence to people such as prominent identities and professionals to develop an idea of who might be interested in investing in your business.

Once you have a list of say 200 friends, family, fans, employees, customers, landlords, prominent identities and professionals, categorise them. The majority of funds raised in early stage funding comes from these categories. There needs to be a fit between them and your funding requirements. By now your advisors should have agreed with you the amount of capital you need to raise. Note beside each name the size of share parcel they could possibly take. Start at $10,000 then $25,000 and over $50,000. But don’t approach them yet. A Capital Raising Process has many steps and they must be done in the right order.

Once you know how much capital you need to raise, and you have a list of those that can help you start on this journey, the next thing you need is a credible and convincing story. Here are some definitions:

  1. Capable of being believed; plausible.
  2. Causing one to believe the truth of something; “a convincing story”
  3. Worthy of confidence; reliable.

Words associated with a “credible and convincing” story are reliable, honest, dependable, trustworthy, sincere, trusty, believable, possible, likely, reasonable, probable, plausible, conceivable, imaginable, tenable and thinkable.

To achieve all of these a good story needs substance and it needs to be articulated well. For an early stage capital raising there are a number of things you can do to make your story more credible and convincing. The following help!

  • Gather a good Board of Directors. They strengthen the story as they are responsible for shareholder monies being invested.
  • If your business is attractively valued investors will be more easily convinced. Most entrepreneurs over-value their business in the early stages. Early investors will grow the “Story” by saying “I got in early at a great price”.
  • Secure your assets. Your IP should be the investors IP.
  • Show proof your concept or business works through testimonials, figures or first hand experience. “Show Me The Proof”
  • Make sure the business is attractive.Things to strive for. Quality management team, attractive sector, sound and well researched business plan, strategy for delivering value growth.
  • Demonstrate you have made progress to date.
  • Be passionate and likeable.
  • Produce credible collateral. This is also integral to the success of an offer. No point creating a convincing story if you don’t have the materials to promote it. A wealth of materials and links can be promoted through the ASSOB Capital Raising Platform. Videos though are especially powerful. ASSOB research has proven that the use of Videos delivers a 62 percent more capital rasing.
  • Tell them how the story ends! Remember “Flick the little Fire Engine”? One day I’ll be big and strong and FIGHT every flame, When there is a fire, they’ll say “quick!” Call the little engine, call the little engine, call the little engine “FLICK. If you envisage a trade sale, say it. A listing on a Stock Exchange add that to the story. Every one wants to know the ending and how they will get their money back.

To prepare for story telling find a decent writer! This is essential as your story and the offer need to be presented in a compelling manner to attract potential investors. A good writer can also help prepare a few things that are essential to the capital raising process.

  1. An elevator pitch, which is a well-rehearsed description of why you should invest, in language anyone can understand and be delivered in the time it takes to ride an elevator.”
  2. An Investor Presentation. For the development of an investor presentation I recommend you follow the steps outlined by Guy Kawasaki in “The Art of the Start”
  3. A Video script so that a convincing video can be made.

“The “Storyteller” or spokesperson presenting the offer should ideally be the company founder, nevertheless, whoever is going to present the opportunity at investor meetings needs to practice until perfect and should be able to maintain communication momentum.” This list is longer than Mum and Dad.

A good Capital Raising Platform, like the one at ASSOB.com can assist you through these processes to a successful capital raising. By applying the tips above, your business will be able to maintain investor interest while you and them take part in the capital raising journey.

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