10 Commandments of Fundraising

The following are the 10 most commonly violated principles by those seeking to raise capital.

1. Focused Planning

Strategy should be straightforward. Focus on the problem you are trying to solve. Know the difference between innovation and applied technology and recognize that unrestrained funding is not likely to occur. Narrowly define target markets and restrict yourself to two or three segments.

2. Clear Vision

Create excitement around your plan. Show energy, enthusiasm, and commitment in how you present it. Detail your long-term vision and then spell out short-term practicalities of its implementation.

3. Targeting

Research and understand your target audience for both your plan and your pitch. Understand your prospective investor's job history, areas of expertise, prior areas of investment, etc. Present yourself in selling mode and understand your prospect's hot buttons.

4. References

Arrive via referral. A reference will give you credibility, visibility and the investor's attention.

5. Brevity

Keep your plan succinct. Although graphics can be overdone, they convey information efficiently and add impact. Your plan should be no more than 25 pages prefaced by an executive summary of no more than two pages.

6. Presentation

Pitch your plan - preferably in no more than an hour. Have backup slides for common questions. Prepare a reference list in advance that you can leave behind. Create a efficient impression to show that will run your business well.

7. Research

Thoroughly evaluate current and prospective competition. Honestly assess your relative status. Openly disclose management team background strengths and weaknesses.

8. Finance

Be realistic about financials. Build projections from the ground up, not the top down whenever possible. Show investors direct contacts who are willing to vouch for the product and company.

9. Valuation

The entrepreneur must give credit to the value-add of the angel or professional investor.

10. Exit Strategies

An IPO is one obvious path, however strategic buyers are acquiring more and more companies. Be explicit about potential buyers and the rationale for their interest in your company.