Welcome back to Million Dollar Monday! I am passionate about helping more women learn to raise capital for their businesses. Why? Did you know that in the U.S. women start their businesses with six times less funding and have revenues that are only 27 percent of men’s businesses? These two stats are related, and I want to help more women raise money so they can go further faster in business and enjoy more success and freedom.
Many founders say they don’t want to raise money, in part because it seems intimidating and inaccessible. And in many ways it is, but that is starting to change. More and more women ARE raising capital and their businesses are growing faster than if they hadn’t. To get my company, Little Pim, to the seven figures revenue mark, I needed capital to ramp up our marketing, hire a professional staff and build out our product line. First, I had to learn the “fundraising dance.” I find it’s helpful to think of fundraising as a “dance” instead of this intimidating test that will put you in front of crowded rooms of mainly guys in suits (though it might) and answering tough financial questions (though you will have to!). Just like salsa, tango or the fox trot, every dance has its own moves and takes practice; if someone spends a little time with you, you can learn even the most complex moves. That’s where I come in.
I spent many years learning the fundraising dance, and have raised $6 million in capital and $20 million in philanthropic dollars. My mission is to help you do it faster and with less time away from your business, friends and family. To this end, I started teaching an in-person one-day boot camp, which turned into a partnership with Morgan Stanley, that has trained over 50 women and an online course called Further Faster Funded. If you are on the East Coast, consider joining me and ten other women raising capital for the upcoming May 28 boot camp, or you can take the online version in your pajamas here.
If you are new to fundraising or just starting to consider it for your business, here are the five main vehicles for finding capital (detailed descriptions of the how, who and when of each phase can be found in my forthcoming book, Million Dollar Women):
- Friends and family — This is usually the first money you raise, used to test the viability of your product or service. These investors are people you know who are willing to take a chance on you because they trust you and believe in your vision and that you can execute on it.
- Bank Loans — Small business loans are available through a bank or local small business office, and many women access first capital this way. You can find great information at SBA.gov.
- Crowdfunding — An online fundraising platform carries little risk since you are not actually selling shares in your company (check out sites like Indiegogo, Kickstarter and Plum Alley, which focuses on women-owned businesses). Women are particularly good at crowdfunding because it makes use of social media platforms, where women outnumber men and usually maintain several active networks.
- Angel investors — These are usually individuals who have an interest in your industry and a passion to get involved, putting their own money on the table. What’s more, angels often have years of experience and expertise to share with you, as well as a large network of contacts to introduce you to.
- Venture capital (VC) – This one is the hardest of the fundraising dances. It takes traction, chutzpah and total confidence in yourself to learn these moves. You’ll need to understand and and explain how your business will make big money within 5-7 years. Before investing, VCs will conduct “due diligence,” where they ensure that a company’s financials are in order and the business model is sound, and the dance here takes several months so don’t look for VC funding if you are in a big hurry. Proven success raising previous rounds of money will be helpful when going after VC funding, so this resource is best when you’ve already had a successful crowdfunding campaign, angel investors, and significant sales and/or users.
Regardless of the type of investor you are approaching — angel, venture capital or your cousin Martha — you need to inspire potential investors with your passion, dedication, and big vision for your company. The Chairman of the much-sought-after New York Angels investor group, Brian Cohen, sums it up this way: “Before I write you a check, I want to feel something.”
Are you ready to raise money for your business and take it to the next level? Here are some questions to help you think it through. Talk about these with a fellow entrepreneur, advisor or more experienced CEO and see what comes up!
- Am I thinking big enough? Where could my business go if I had the resources to take it there?
- What part of my business might be scalable? What might, with some initial investment, pay long dividends?
- What would more money provide my business? Could I make strategic hires? Expand my marketing budget? What would running my business the way I always wanted look like?
So, get on your dancing shoes and I’ll see you on the dance floor!
Until next time,