7 Tips for Raising Capital

Simon Foster, founder of SimonDelivers.com, a profitable online grocery delivery service covering Minnesota and Wisconsin, shared his insights in a presentation, "Do's and Don'ts of Raising Capital", last week at the University of Minnesota's Carlson School of Management. Mr. Foster succeeded in raising $80 million over 8 years to grow his business.

Included below are the main points of Mr. Foster's advice, but the highlight of the presentation for me was a simple, optimistic thought he shared with the audience about the rewards of starting your own business:

"You'll either be richer or smarter... or both."

Simon Foster's thoughts on raising capital:

1. Fund raising is a full time job.
2. If this is your first time (raising capital) then your 'hit rate' will be 1 in 7 if you are lucky or good.
3. Investors are assessing the level of risk on the basis of: A) The space/sector your business will occupy; B) You; C) Your team; D) The plan whether it is fully funded or not.
4. Investors are a little like sheep and sheepdogs. Leads are huge influences of the money that you raise ("woof"). Everyone else follows ("baa").
5. While you need to be smart and figure out who the "leads" are, remember it is also a numbers game.
6. Understand the 10x return rule and don't get too greedy early one.
7. If you've never done this before, get a mentor or a couple of advisers to help guide you.