You have an idea (a product, service, or offering) that has you so excited you can’t sleep at night. It will not only make millions but might just change the world. Or, at least, it’s going to change your life circumstances (leave that job, have the money for that beach house, get to six figures, make millions or whatever it is)…
Keep that excitement.
Your enthusiasm is not only admirable; it is IMPORTANT if you want to be successful. And, for many entrepreneurs, maybe all you need to do is raise the money to make it a reality.
BUT, let me save you an incredible amount of time, frustration, and perhaps massive disappointment by telling you:
No one cares about your idea, and no one is going to invest in it.
Yes, I’m serious. I’m very serious!
Why do I say that?
I have three very big reasons to make that incredibly blunt and direct statement.
First: Statistics are on my side. Only 2% of all companies seeking venture capital successfully raise. Further, less than 1% of companies achieve scale (I’m not talking about ideas; I mean true companies)… so going from idea to funding to scale… yikes.
Second: Investors (at least sophisticated investors) don’t invest in “ideas”, hence the 2% noted above. If you don’t understand what they invest in and HOW they invest, this reduces your odds even more.
Third: I just want to be honest with people and help them defy the odds, so sugar-coating reality will not help. People who try to support you no matter what (like your mom) will love your idea but otherwise… not so much.
So, in reality, you need to face the facts…
Recent Conversations Prove the Same
I had three different calls this week with entrepreneurs I took time to speak with. Nice people, lots of enthusiasm. Really excited to tell me about their ideas. But none of the three will get funding (well, unless their mom writes the check).
I’m saying this because someone needs to be honest with you.
Don’t believe me? Do some homework, and you’ll find out very quickly exactly what I’m trying to tell you… or you can learn the hard-way. The average capital raise takes over 6 months (even the 2% that are successful… So after 6-9 months of meetings with lots of encouraging statements but no actual investment you will likely come to the same conclusion).
There is not an ounce of me trying to be arrogant or dramatic here. I know if I’m honest with you, some of you (maybe only one of you) will think deeply about this and defy the odds. Maybe you take the time to understand how the capital raise process works. Hopefully many of you will at least be better equipped for the process if you weren’t already aware of how brutal it can be.
Ok, if you were waiting for the punchline, this is it.
I’m going to give you the information you need to know. It’s not a quick fix. It’s not a 5 minute abs video or special pill that promises results. It is the actionable info you to know and the reality of the process.
If you read everything above and think that you can defy the odds, then read it again. Do some research. Still convinced you can break the mold? Read it again… and again.
At some point, you should start realizing you don’t know HOW to make it happen. You want to— hell, you are committed to— but you don’t know how. THEN, and only then, are you in the right mindset.
Here are some points you’ll need to spend a LOT more time on:
Start with this…. Investors don’t invest in ideas.
They may invest in performance. What they do (good ones anyway) is a tremendous amount of research and diligence to methodically evaluate market dynamics, economic trends, and consumer behaviors WHEN you show them actual performance of your product (revenue growth month over month, customer acquisition curves, adoption rates, DAU/MAU, etc.). And when you have performance, make sure you still need capital as growing without it is often the best result.
They will want asymmetric risk/reward. Investors aren’t gamblers. They want to mitigate risk while maximizing returns. This means you have to have mitigated a ton of risk OR be able to provide off the charts returns. But hold your hockey-stick chart and refer to #1 above. This “return” is likely to be based on their analysis of unnatural growth curves you are already achieving not your powerpoint or market-share projections.
They may invest in people. 75% of all investors will ultimately invest in people (you and your team) if the other factors they are evaluating are all generally positive. So if you have great performance, an unfair advantage in a giant market, and your team is off the charts, your odds are getting closer to 5-10%.
Discouraged? Then this path may not be for you. I’m just getting started.
Did you invest your own money in this idea to get it going? How much will you invest and what are you putting on the line to make it work? Your house? Your whole 401k? If you can’t write a big check showing that most of your livelihood and life are on the line, you might look like you are just raising money so you have a job. You have all the upside (the majority ownership of the company), so that asymmetric reward is there for you… but how big is your risk? If you don’t have ANY money or assets then achieve the same result with your family, best friend or someone you care about. Investors need to see skin in the game and that you have something to lose.
How long have you been committed to getting the MVP live? How much have you personally committed to educating yourself (the books you needed to read, the online courses you need to take, the conferences and events you needed to attend)?
Do you have a pedigree (Ivy League school, worked at Facebook/Google, did some programming for the NSA. Or family vacations have happened in the Hamptons for the last few generations)? If so, your odds went up a bit. The rest of us take another punch in the face. Odds drop without a strong pedigree (but I did it anyway, and so can you).
I’m hoping you are still reading because that means either you are a glutton for punishment or you are actually committed to make something happen. So, I’ll stop the torture and go right to solutions even though there are at least 5-6 more hard, face punching points that could help set your expectations.
Here’s the reality. If you want to build a company, you can. If you want to raise money, you can. I am positive from the post you just read that you understand it isn’t and won’t be easy, but it seems you may possess one of the single largest determining factors of success: perseverance.
Good. You’ll need that.
So here’s the overly simplified formula:
- Face the brutal facts. (Read this from the top again if necessary).
- Resolve to succeed anyway.
- Educate yourself (on investors, how they invest, on raising capital, etc.).
- Commit to your vision, but remain open to learning constantly.
- Go forward and don’t look back until you’ve succeeded.
If you have a great idea and are ready and willing to do the work, I can save you months of frustration (and likely failure) by giving you the step by step process to help defy the odds.
When I started these bullet points described me:
- No pedigree.
- Kicked out of college.
- No family money.
- No engineering degree or first job at Google.
I did it the hard way… Just like you will have to. But, I put the past 25 years of raising money and growing and selling companies in process so you’d have what I needed when I started: strategies, frameworks, and answers!
You can read more of my story here. I’m here to help. I think the best way I can help you and everyone with a dream is by helping you face the cold hard facts then giving you the tools to defy the odds.
Then, the best way to start is with this free eBOOK on Raising Capital. Click to claim it!
P.S. I actually created and was selling a full course (The Insider Secrets to Raising Millions) with all of the videos, frameworks, tools and actionable advice on how to raise money, but I just recently included the course within the membership of The FĒNX. It is one of the many reasons you should join :) So that previously $400 course is now included with your membership.
Here is a link to a $1 dollar, 30 day trial. Hell, you can take this (previously $400 course) for $1 dollar and then drop out if The FĒNX isn’t a great fit for you. You can cancel any time. No obligations, no strings attached. thefenx.com/trial
By the way, If you aren’t willing to invest $99 a month (the heavily discounted price of the full FĒNX platform), then go back to the top and start over reading this post. I’m very serious. Being an entrepreneur is really tough and you have to commit, invest in yourself, invest in your business and really push yourself. The only shortcuts are learning from others (mentors and advisors). If you make it back to this point again, here is a link to the trial: thefenx.com/trial
I am just like you. I am an entrepreneur, not a social media star. I sometimes wish I was better at social media, but the reality is I can help. I’ve helped others and I can help you. I post a lot of free content on my blog. My email list gets even more info. I hold free webinars… or If you want to be a part of what I’m doing, just join.