Steps to Raising Money

There is no single best way to raise money for your new venture. What works for me may be less than effective for you. However, there are some guidelines that can be very helpful if this is your first effort in raising money. Here are a few guidelines that can make the job easier and hopefully, more effective.

First, determine how much money you want to raise. It is likely, if this is your first money raising effort, that you will be talking to angel investors or micro Venture Capital firms and sums of money less than $1,000,000. The amount of money you will need should be determined by understanding the next major milestone in the business growth process, how you believe you can get there, what you will need to reach the goal, and how long it will take to get there. For instance, if you are developing software and are currently in the "beta stage," how long will it take to have a marketable product and what will it cost to run the company until you get there, also know as the burn rate. It may take $30,000/month for 10 months or $300,000 to get that marketable product. One thing you can be sure of is that you will most likely be wrong in the time it will take but you should not be far off when it comes to your monthly expenses. Give yourself a month or two cushion in case you encounter problems and ask for $360,000, first round. Being specific gives the investors confidence that you are reasonable sure of achieving your goal and reasonably sure of reaching it in the estimated time frame.

Second, you will need a few documents that describe your business. One being the "One Line Pitch" like "The patented Grey-Spook widget is recommended by Doctors at the Madness Clinic and designed to reduce the pain of surgery by simply holding it between your teeth for 14 minutes immediately after you awaken from anesthesia." Another being the Business Summary, a paragraph that explains the business process and what your product does, like: "Grey Spook, pain relief widgets are used everywhere to reduce pain and discomfort from surgery. Patients rave about the effectiveness of this simple, yet effective tool for managing pain. The "Grey-Spook" is priced at only $25 and we estimate the market to be three billion annually. There are no known competitors." Finally, you should have a Management Summary, something like: "Robert E. Nuff, invented Grey-Spook and has had 15 years managing pain relief at Robert E. Lee hospital in Houston TX as head nurse. Tammy Toogood has 30 years manufacturing experience with the leading manufacturer of pain management devices in Galveston, TX. " These tools are intended to impart maximum knowledge in the shortest possible time.

Once you have gotten the attention of a potential investor be prepared to deliver a more detailed Executive Summary, possibly as long as 3-4 pages. This short, focused description should be carefully crafted and void of anything that resembles "fluff." It will likely be the first substantive information several investors will ever see regarding your company, so make it good. In this summary, you should include the problem you are solving, why it needs solving, how your product solves the problem in unique and intriguing ways and finally why you and your team are the best choice to "deliver the goods." End with a "hook" about the financial end-game and how your approach will distance you from any competition. Don't go overboard here, but do be aggressive. Have this summary prepared and send to any VC that requests it. Wait, however, until it is requested. Be a little hard to get, not too much so, but a little.

Lastly, build a 7-15 page Power-Point Presentation. This should be your most detailed description, yet. Understand that, on average each page (I still call them slides) will take about 3 minutes to present. So, on average a 7 pager will take 21 minutes to present and leave 9 minutes for questions in a 30 minute presentation and a 15 pager will take 45 minutes and leave 15 minutes for questions in an hour presentation. It is good to have at least 2 versions as you are often time limited and 2 versions will allow flexibility to meet most needs. Remember in preparing your pages (slides) keep the information on the slide at a minimum. Never have to say, "I know you can't see this very well." The Power-Point presentation should be practiced using key words and leveraging "attention getters." Be certain you include summary financials and how you will use them. Most good presentations are the shorter versions.

This brief, and certainly not "all inclusive" commentary is intended to give a quick overview of what investors ask for and need to make decisions about investing in your company. Follow them and increase your chances of success.

The Five Point Job Recovery Plan

Entrepreneurs don't often do the things they do, for the money. They often do them for the passion they have or simply to prove that they can do it. Even though 500,000 new businesses starting each year (the number of startups in 2010) seems like a big number, it is actually an all time low during the recent past (2006 startups numbered 667,000).

"Why" you ask, "is this important?" Here is why; Businesses, less than five years old, have contributed all the net new jobs in the United States in the last decade. And most startup businesses have no employees. So, those that do are ever-so-much more important in our effort to dig our way out of this recession. While I would not be so bold to say that Entrepreneurism alone will return us to full employment ( 5%), it is certainly an important factor.

So, an interesting and important question might be: Why are new business startups off nearly 25 % from their all time high in 2006? And/or; What needs to be done to restore the startup level to the 2006 high and beyond? And/or; How do we go about greasing the sled for Entrepreneurs and Business Startups?

I believe that this five point strategy will go a long way to restoring the climate in this country that incentivizes not just Entrepreneurship but Successful Entrepreneurship (establishing a means of improving the 5 year success rate of startup from 30 to 50 percent).                                           


1. Most money for a startup business comes from the owner's savings which includes the equity of their home or retirement savings. Money, from home equity and/or retirement savings, has shrunk considerably since 2007, for reason I won't go into here. Considerable losses have occurred in those two areas since 2007. I suggest that we compensate for that difficulty by giving those who start businesses a TAX CREDIT up to $25,000 for money invested in a start-up business.

2. Reward those Entrepreneurs that are successful with a one-time 150% deduction for annual wages of new employees, during the first 5 years of operation.

3. Streamline and reorganize the US Patent office which now takes an average of over 3 years to approve a patent application. Begin by giving first time patent appliers a guaranteed 90 day up or down answer.

4. Reward Entrepreneurs that start businesses in the potential high-growth industries of tomorrow: health care, business services, leisure, construction, manufacturing and retail. Give all business startups, surviving the first year in those industries, a $25,000 grant to purchase needed equipment or software.

5. Provide TAX REBATES, up to $5000 a year for the first 5 years of Entrepreneurial activity involving a business with 5 employees or more, provided they can show evidence of investment in specified Entrepreneurial education.


I am calling this five point strategy, The Entrepreneurs R Us Job Recovery Strategy. If you feel this would benefit you or someone you know who is in a startup business situation or thinking of engaging in one please write us.