Fundraising to Start a Business

The "cause" of a business - it's purpose or reason for being, is a very powerful tool - both in raising money, and in creating a plan around which you can succeed.

Raising money consists of going to potential investors, communicating why you exist and are worthy of their support, and asking for an investment. It's really that simple. The process has to be nuanced based on who it is you are asking, how much money you need, what kind of expenditures it will cover, etc., but the process remains the same no matter what the variables are.

If you're company is a start up, you are likely to expect that much of the inflow of resources will come from "sales" as well as investments, and in fact must be driven by sales in the end, but as you attract needed investment, you will go through the same process as you seek the funds you need to sustain operations.

In a for profit business, most wise entrepreneurs learn quickly that showing a set of financial projections with lots of numbers, displaying a pattern of growth and intended profit, is essential to success in attracting funding. But savvy investors recognize that it is easy to replicate numbers from one business plan to another - the real potential to be demonstrated in the start up phase is in the core message, the original idea combined with the creation of a minimum viable product. You must be able to answer the question, "What is your cause or purpose, and why is it worthy of my investment"?

This is where the skill and experience really can be useful to an entrepreneurial company designed to make a profit - possibly a very large profit.

Defining, refining and communicating your mission and bigger message can be your ally in raising money. It's true, that having a product that has succeeded already - to point to and say, "this is what we are about" gives you a great advantage in the marketplace, especially with new investors, but if you don't have that, you can't say it. Instead, you need to be able to cast a vision.

Tell your prospective investors, "this is how we will change the world if we are successful" - and you need to believe it! It does not have to be in a way that will transform the world - it may be as simple as a new twist on apple pie, but every positive change has value, and it has value to many people.

So, keep it simple, yet, be direct, sincere and focused - and in time, success will follow.

Andrew Thompson is an attorney working with emerging businesses to build successful strategies for achieving their long term objectives. Contact Andrew today toll free (317) 604-1276 or at (317) 564-4976, or via email at andrew@fla21.com to find out more about how the Thompson Law Office and FLA21 can help your business succeed.