October 15, 2007

How hard is it to raise capital?

I routinely receive questions from entrepreneurs who are either on my telephone seminars, on my Webinars, or who just write in asking for help. I dedicate these blog entries to all entrepreneurs who are looking for capital, whether debt or equity, and need some assistance in succeeding with their efforts. I'd like to address a few questions that entrepreneurs send to me.

Question: How hard is it to raise capital?

Answer: Raising capital, for some people, is the easiest part of running the business while for others, it's the hardest. How can there be such a dichotomy between these two perspectives? Well, it depends on many factors.

For some, the problem is that there's an element of sales involved in raising capital. Some people just don't like the concept of approaching other people and asking them for money. If you don't have a temperament that makes you comfortable in asking for capital or asking for other assistance from people that you know, then raising capital may be very difficult for you.

However, if you're someone who likes interacting with people, if you believe in yourself, you believe in your concept, and you believe that the person putting the money in will eventually be better off because of their relationship with you, then raising money just got one step easier. It doesn't mean, however, that it's still going to be easy. A few things have to happen in order for you to succeed in raising capital:

1. You have to have people to call on to ask if they would be interested in your deal.

2. You should try to involve people in your deal who have some interest in the business that you're promoting. For example, if you're promoting a scientific endeavor, a scientist would be a likely good catch. If you're promoting an animal product, then an animal lover would likely be a prospective investor for you. I try to correlate my projects with investors who are likely to be interested in the overall concept, and the reason for that is that if they can understand it and if they're interested in it, they're more likely to want to back it.

3. You have to have a really strong strategy. You have to be able to communicate to the investor what you're doing, what the problem is that the market has, and why the solution that you're promoting is a great solution that lots of people are going to want to give you money for - so that they don't have that problem anymore.

Most entrepreneurs that I run into fall down desperately in the strategy area. It's so basic in business that you wouldn't imagine that people have this problem, but sure enough, they do.

I said that raising capital is difficult especially if you don’t like to sell. But if you do a good job of aligning your deal with interested investors and if you have a great strategy, then you will have all the firepower that you need to make the job as easy and enjoyable as it can be.

So as you're going out to raise capital so that you can build a great business, make sure that you love what you're doing and that the company that you're building is consistent with the values that you believe in and bring to the table. And when you do that, and you sincerely and genuinely promote these concepts to people who are in your circles, you'll find that raising money is not hard at all.

About Joel G. Block

Well known in the business community, Joel Block is a best selling author, speaker, and business strategist. Frequently a principal in his transactions, Joel has raised tens of millions of equity dollars for his ventures, which have included real estate syndications and privately held businesses.

Joel’s career is highlighted by the launch of a financial publishing company which he grew nationwide and later sold to the Los Angeles Times. More recently, Joel works with scientists, engineers, technologists and others to help them optimize their entrepreneurial opportunities. Would you like to get a private phone consultation with Joel? Visit www.joelblock.com/capital for details.

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