Beware of the “Half-baked” deal
So I had a meeting last week with a well-known banker here in Utah. He has an extensive background in the VC/angel investing space and is very well-connected. During our conversation, something he said caught my attention:
(paraphrased) “One of the problems with the majority of entrepreneurs is that they are in too much of a rush to raise money. As a result, they end up serving up a ‘half-baked’ deal!”
What does it mean when a deal is half-baked? A half-baked deal is one that is not angel/VC ready. We entrepreneurs are inherently confident people. In most cases, we have been successful at what we do and so we believe that we can raise money on our own. We do the best that we can to draft and executive summary/business plan and then we start distributing it to every investor that we know!
What’s the problem with that? The problem is that investors are VERY hard to please. You usually only get one chance to make a good impression. Not only that, but investors also roam in packs. When they’ve seen an exceptionally good or, on the contrary, a bad deal — they will talk about it with their investor friends. In other words, if you are not sufficiently prepared when you start seeking capital, your chances of getting funded will be decreased dramatically!
How do I avoid the dreadful half-baked? 1) First, you must begin the fund-raising process early. Don’t force yourself to be in a rush to get money — it will only result in bad karma (and most likely bad deal terms). 2) Second, if needed, get help (in the end, it will probably save you a lot of time & money). There are many people that can help you with your business plan/funding opportunity — at FundingUniverse.com, we have very affordable and helpful packages/consulting services that will get you well on your way (if you’re interested, email me: bblake “AT” fundinguniverse.com). 3) Third, get advocates. If you can get someone “in the investor know” to be on your side, it will really help your cause and open a lot of doors.
Bottom line… be prepared. It will save your time, money, and reputation!
Brock Blake: Beware the Half-baked Deal…
Brock Blake, CEO at FundingUniverse.com, wrote a great post last week on the dangers of presenting a "half-baked deal" to an investor. One way to avoid receiving the "half-baked" label is to be cautious in the early stages of pitchi…