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Of course, you want to own 50 percent of a company that makes $10 million a year.
You know what the difference is? Venture capital.
Today, I’m going to share with you how to raise venture capital.
See, over my lifespan, I’ve raised more than $20 million.
That may not seem like a lot.
It’s because I’ve learned that you shouldn’t raise more than you need.
Sure, some people raise hundreds of millions of dollars and then their company fails and the VCs take the whole thing.
The key is with venture capital is to not raise too much, just raise a little bit more than you need.
The reason I say a bit more is because things always go wrong.
You may think, oh, I just need this much money, and then things will go right, I can do this and that, but things always go wrong.
always add some padding.
Now here’s the thing that most people don’t tell you about venture capital.
When I first started off, I would go to VCs and pitch them like here’s my idea; it’s cool, it’s the next best thing since sliced bread.
You have to invest. And you know what they said?
Oh, cool yeah, I’m interested, let us think about it, and we’ll get back to you.
You know what they did? They never got back.
Why? Because I didn’t build a relationship with them.
See, venture capital is all about who you know. It’s not about going out there and just raising money from random people.
It’s really about raising money from the right people. And what I learned about venture capital is when you build up a relationship and you get to know people, they’re much more comfortable giving you money.
Why? Because the idea they invested in, and they see this, is probably not going to be the idea that your company ends up with.
Ideas change over time. What you first start with is rarely what you end up with. Things pivot and adapt. So people invest in those that they know.
Twitter started out as Odeo. Odeo was a podcast company, and it wasn’t working.
Then they came up with Twitter.
Podcasting. Twitter. Do you see the resemblance? I don’t. The investors didn’t either. But they understand ideas change.
So, go to events like TechCrunch, they have conferences.
Who are at the TechCrunch events? Investors.
Mashable has meetups. Who are at those kinds of events? Investors.
Before you pitch them, you have to get to know them first.
That’s the biggest mistake entrepreneurs make.
People go and try to raise money, which never really happens, from random people that they don’t know. And it usually, in most cases, ends up in disaster.
You need to create a deck.
There’s a lot of amazing decks. If you go to SlideShare, Dave Mcclure once released a deck that shows you how to raise venture capital.
I understand technology’s changed, but the same pitch that worked back then works now.
If you follow these steps, you will be better off, and you should have an easier shot at raising money.
If you’re not passionate, you’re probably not going to get money.
If you don’t have a co-founder, again, it’s going to be hard to raise money.
VC’s know you’re not going to be able to do everything.
If you’re a business person, find an engineer. If you’re an engineer, find a marketer or a design or a product person.
You want to have at least two or more co-founders.
Now that you’ve got your co-founders, you have to pitch a big idea.
Ventur Capitalists are looking for the next Uber, Airbnb, eBay, Google, Microsoft; you get the point.
Create something that’s huge.
They’d rather have you swing big and lose money than not take any risk at all.
They don’t want you to create a company that does $20 million a year and sells for $50 million. It doesn’t do much for them.
So go after a big idea, or no one’s going to give you money.
After you raise the Venture Capital, you should always be fundraising.
Before your money runs out, raise more money.
You want to have a healthy cash reserve, or else you’re going to have a much harder time raising money.
If you ever tried raising money or struggled out there, just leave a comment below, and I’ll tell you what you did wrong.
I hope this video helps you. If you liked it, please subscribe to this channel, like the video, share it, let other people know about it.