Many first-time entrepreneurs become discouraged when they realize how challenging it can be to raise capital for their business. Closing a round can often take months, and that’s if you’re lucky and can convince people to invest in your business. But don’t give up. When the going gets tough, break open your Rolodex and get to work. And let CapLinked’s site help you put your network to work.
1) Ask people you know for help. This seems obvious, but many people are too afraid or too polite to do this. If you believe in what you’re doing and think you’ll be successful at it, you’re offering people a good opportunity. So you have to nothing to fear or to be embarrassed about when asking people you know for money to invest in your business. In fact, if you don’t feel comfortable asking your friends, relatives, former colleagues, neighbors and anyone else you know to invest in your business that may be a sign you don’t have what it takes to be an entrepreneur. A successful entrepreneur has no fear of asking people for money. That doesn’t mean you should be rude, careless, or in any way misrepresent the opportunity, but you should be confident enough in what you’re doing to feel proud and excited to offer people you know the chance to participate in it. CapLinked can help with this process by giving you a private, secure deal room that you can use to easily share your deal with people you know and track who looked at it so you know when to follow up with individuals who might be interested.
2) Don’t give up easily. This should also seem obvious, but many people are way too easily discouraged and give up if they don’t quickly succeed at raising the amount of capital that they think they need for their business. Legendary entrepreneur and current owner of the Dallas Mavericks Mark Cuban once said that most businesses can be initially launched with a lot of sweat equity and a mere $10,000. Pretty much anyone, even with a creative use of credit card debt, can put that together. After that, it’s a matter of hard work and building one step at a time. If you can’t raise as much money as you want right away, don’t give. Take what you can get and start doing what you can with that money, your own labor, and help from friends, family, and others who believe in what you’re doing even if they don’t have money to invest right away. Deliver some results and let your initial investors see you in action; this might inspire them to contribute more capital or bring some of their contacts in as investors. You can use CapLinked to keep everyone who is involved with your company easily updated in real-time using our secure, private company reporting features.
3) Leverage your extended network for help. To raise capital you’ll likely need to go beyond the people you know well. This means asking people in your extended network to reach out to their close contacts. These second degree network connections can lead to some surprisingly powerful results that you may never get just focusing on the people in your inner circle of contacts. We built the CapLinked deal feature to help with this process. It allows your contacts to share your deal with their contacts while allowing you to keep track of everyone, including people who viewed the deal indirectly through someone you know.* We also tell you when they viewed the deal and what documents they downloaded. This lets you know who is interested so you can follow up with them directly, even if they were not on your original list of prospects.
4) Close doesn’t count. Raising capital for growing your business is not like throwing grenades or playing horseshoes. Sometimes entrepreneurs are satisfied to just get prospective investors or other people who could help grow their business to provide moral support and advice. While advice can often be helpful, it doesn’t pay the bills. Be persistent and resilient until you get a firm answer. Getting a flat rejection is often better than not getting a response since at least you’ll know where you stand. (If getting a door slammed in your face bothers you, you may not have what it takes to be a successful entrepreneur.) Imports your contacts into your CapLinked address book and use your deal room to keep track of all your prospects, the status of their responses, and for gently reminding them of your requests for their attention and assistance.
(* Note: To view a deal on CapLinked, the recipient must certify that they are an accredited investor, institutional investor, or an advisor to one of these investors. This Q&A from the SEC provides information about raising capital and complying with federal security laws.)