Real Talk: 5 tips for raising seed capital

I’m going to hold myself to account in this article. I am implementing a strict no-bullshit rule. No flowery language, no buzz words and no unachievable advice.

I know what it feels like to hear all those things, and I know what it feels like to say them, also. I’ve raised capital twice as an entrepreneur and worked in VC making seed-stage investments for 5 years.

All businesses are different. There are seldom two the same. Different sectors, different modalities and different markets. So, I will try to keep m advice as broad purpose as possible and let you guys figure out the specifics as they apply to you.

I don’t want to be a Gary Vee or a Joe Rogan, either — but I do want to be a slightly shitter version of Richard Branson, who has consistently achieved product-market fit.

Here goes:

  1. Be loud and proud about what you want your Company to be. Don’t mince your words or rely on euphemisms. Don’t be shy, don’t be bashful. It doesn’t have to necessarily solve a problem to consumers, so don’t believe that nonsense, If you want to take on Amazon, then state that. It’s a tall order, yes, but don’t hold back. No investor gets excited by caution.
  2. Don’t spend any time on financial projections. They are made up, a work of fiction. Nobody confidently knows how the market is going to react. Particularly if you are at seed stage or pre-revenue. Just work out the core fundamentals of your business, the underlying assumptions. Things like gross margin, cost of acquisition and market size — and after that, do a prudent cash flow and build in a bit of tolerance for an emergency. Nobody is interested in a made-up excel document detailing 5 years worth of hockey stick revenue, however fancy it is.
  3. Speak to Customers. You need to validate your idea. Do not be too precious with NDAs or any of that nonsense. Figure out your target demographic and speak to them. Get letters of intent or interest if you can. Find out if they want your offering and would be willing to pay for it. There is no point in thinking you have a great idea, you have to test and validate.
  4. Have a team. It’s tough behind a solo entrepreneur. It’s a very hard task and you won’t have access to the diversity of knowledge and skillsets required. Co-Founders are good. Availability of skills and commitment are good. Even if you are the most introverted introvert there ever was, there will the right nutcase for you out there — but, graft and find them. You are significantly more likely to raise capital if there is a team to help you in executing your plans.
  5. Tell the investors how they are getting their money back. Investors are not philanthropists. It feels like that, sometimes, when you are out there begging for capital…but they are investing money in your business to grow their wealth. So, show them how that is going to happen. Tell them how you intend on getting their money back — is it IPO? Trade Sale? Management Buy-Out? Whatever it is, make sure and tell them how much they will get back and when. It’s only a guide, don’t worry — but writing this down on your deck projects confidence and an awareness of investor ambitions.

OK, so you have heeded my advice and prepared a pitch deck accordingly.

Next up? Knock on doors. As many as you can. Be prepared to hear “no” a lot — and be prepared for slow rejections as well as swift, brutal guffaws.

It’s a numbers game, though. It might be that 20 conversations yield 1 open door — that’s ok, at least you have metrics. Go knock a few doors down.

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Founder of www.realcbdclub.com —Former VC and Startup Guy…I write for fun. About things I like, and some things I hate.

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Phil Patterson

Phil Patterson

Founder of www.realcbdclub.com —Former VC and Startup Guy…I write for fun. About things I like, and some things I hate.

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