Time and time again entrepreneurs and small business owners get turned down when raising money. The statistics show that over 95% of bank loan applications and angel investor submissions get rejected. The tendency is to blame the bank or the angel investor for being bureaucratic or greedy instead of asking the question “Did the business meet the criteria of the capital source?”
This high failure raise leads to statements that there is “no money out there” when in fact “there is capital everywhere”. How can there be this radical difference in perspective?
Maybe people are looking for money in all the wrong places? This analysis sounds like the lyrics to Johnny Lees’ song Looking for Love.
When talking about love, you often hear people talking about their ‘soul mate’ – that one person on this planet who fate has dictated will be the source of happiness in a relationship. This analysis recognizes that everyone is different – we are all humans, but we are individuals. It supports the thinking that there is that one person who is the best match for any other person. This rationale is the framework for dating and matchmaking services.
However, when it comes to money, all of this analysis is abandoned. The focus becomes on the money, not on who is making the decision to invest the money. Yet, the individual making an investment decision is just as unique as the individual falling in love.
So, in the hunt for funding, who would be the ‘money mate’ for your business? Who is the perfect match that will make all your dreams come true? Time expended in this analysis will shorten the time expended in seeking funding.
Institutional investors (banks and venture capitalists and finance companies) are engaged in a business where they have to make money on their money. They have established criteria that they follow when making investment decisions and they will share that with you. If you don’t meet the criteria, don’t be surprised if you get turned down when you apply.
Wealthy individuals may or may not have set their criteria for investing. Ask these individuals for their criteria. In some cases, it is limited to making money. In other cases, it is to advance a cause and create a positive impact on their communities. If you match, then seek funding. If you don’t match, seek a referral.
Businesses may invest as matter of strategy. Does the success of your business advance that strategy? If so, explore this as a source of funding.
Customers may now invest through securities crowdfunding. Their interest in investing is amplified when they care about the products or services that you offer and about your role as a member of your community as a local business.
Foundations may provide funding through ‘program related investments’ (PRI’s) to those businesses whose mission aligns with their mission.
Government agencies may provide funding to advance research for the public good or to generate economic growth.
The interest in investing and the criteria for each investor is different. Learning this information and using it to find your ‘money mate’ will save a lot of time and heartache.
The Colorado Capital Congress is presenting a workshop on ‘Building Capital’ on May 28th that will include skill building on matching a business with an optimal investor. For more information or to register, go to http://www.coloradocapitalcongress.com/events.
The Colorado Capital Congress is a public benefit corporation whose mission is to help everyone in Colorado gain access to capital.