Lots of Capital Not Enough Good Deals
I went to The Wayne Brown Institute’s seminar about raising money in Utah. It was long but interesting. There were several women there.
Here’s what I took away (and I’m skimming the surface here):
- Understand how to run a clean company. Before you accept any money from any investor, even your dad, know the laws. You could jeopardize future funding.
- Networking is BIG. You need an introduction by someone they know and trust. Go to seminars like this. Do people favors and get to know people. You probably don’t know people with money but they might.
- Do your homework on your funding source. Call the CEOs of companies they have funded and ask for advice or input. Know the types of deals they do before you approach them. Read press releases about them. Make sure it’s a good fit.
- Keep confidentialities. Don’t name drop or tell them if you’re talking to another funding source. Be above-board about the weaknesses in your plan. Be careful how you handle confidential information.
- Either you have a solid management team with some good experience and you grow with funding OR you bootstrap and prove your team by showing results (potential customers, a solid product with a strong market, etc).
Types of funding:
seed - idea stag, under $500K, often friends & family or angel investors
institutional - VC money
mezzanine - before you go public, from equity class investors, private equity funds, and investment banker
Utah is attracting more funding both in and out of state:
- 5 angel investors along the Wasatch Front
- Utah has dramatic growth in VC funding since 2000. $500-$800 billion today compared to 1-2 billion then.
There is plenty of capital but not enough good deals. The biggest problem is not having the company clean (get an attorney: just listening to one talk made me know I’d pay whatever they asked so I don’t have to deal with this part on my own).
Here’s what Nick said about it. He talks about the management gap we have here. I’ll add that sometimes leaders here who are LDS lead as if they’re at church. Doesn’t work well in business but for some it’s all they know (how to be a bishop or stake president).
I could write an article on what I learned. I plan to learn more from The Wayne Brown Institute.
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