Raise Money-What not to tell Investors when raising capital

Hosted by Ken Honeyman, The Capital MatchPoint, www.capitalmatchpoint.com, 770.433.8250...When in front of a potential investor, the question is, how does an entrepreneur establish credibility?
What the capital seekers say to our investors may make or break their funding. I think the easiest way to understand of what to tell these people is really what not to tell them. And over 30 years of hearing these phrases or some semblance of them have driven me and capital providers to see caution flags that instantly appear. Keep these phrases out of the conversation.

Don't tell me our projections are conservative. Entrepreneur projections are never conservative. If they were, they'd be zero. Or, "the market will be $50-billion in 2010." The magnitude is just not logical in this economic environment.

Here's another nugget we hear. "HugeCo is going to sign our purchase order next week." This line is trying to show the capital provider there is some attraction beneath their heel. Ultimately, nine times out of ten, the purchase order won't be signed until the next week or the week after or the next year if ever.

Employees. That's a favorite turn-off. "Key employees are set to join us as soon as we get funded." Well, my question is, why would an executive leave a $250,000 a year job to join a start up? That's not going to happen in this economy.

Here's another one to close the door behind you quickly. "No one else is doing what we're doing." Either there isn't a market or you're incapable of finding your competition on the web. Or, "We have a proven management team." Just because your bio says you have a proven team means nothing to us.

Surround yourself with reputable directors and advisors and step aside when necessary.

And, "Patents make our product offensable." Mentioning patents should be talked about one time in the presentation and that's it. Saying you have a deed filed for patents for what you're doing is enough. Filing back up patents is a defense of a hole through your presentation.

And the best of the best is, "Hurry, because several other funding sources are interested." Creating a sense of scarcity is stupid. There are very few people who actually have multiple firms chasing them in this economic climate.

We've heard them all before, and no one want's to hear them again. So, beware as you leave these words for the wise. Prepare. Resist the temptation to repeat any of these nuggets. We can help you prepare your presentation at the Capital Match Point and be professional while you're at it. Visit us, call us, we'll help turn your "no" into a "yes."

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• Ken Honeyman
• raise money
• business plan
• find investors
• business startup
• angel investors
• raising capital
• patents
• The Capital Match Point