Bill Fisher - The Six Secrets of Raising Capital: An Insiders Guide for Entrepreneurs

THE SIX SECRETS OF RAISING CAPITAL

AN INSIDERS GUIDE
FOR ENTREPRENEURS

BILL FISHER

The Six Secrets of Raising Capital

Copyright 2014 by Bill Fisher

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First Edition
Paperback print edition ISBN 978-1-62656-239-4
PDF e-book ISBN 978-1-62656-240-0
IDPF e-book ISBN 978-1-62656-241-7

2014-1

Cover Design: Steve Pisano

Interior Design: George Whipple

Four miracles in my life
Will, Lila, Lena, and Michelle

I learned the lessons contained in this book during fifteen years of raising start-up capital for a variety of new businesses, in a number of countries, and I did so largely through trial and error. I completed thousands of investor presentations, hundreds of follow-up meetings, countless scores of due-diligence exercises, many term sheet negotiations, and dozens of successful closings with angel investors, venture capital firms, private equity funds, hedge funds, strategic investors, large commercial banks, and public market offerings. I have compressed fifteen years of capital-raising lessons into the pages of this slender book. If you study this book, you will raise your start-up capital. More importantly, you can then spend your fifteen years learning some other, more contemporary lessons. Thus is progress achieved.

Trial and error was a costly way to learn lessons; however, the advantage is that I ended up rock-certain of what works and what does not. Most of what entrepreneurs are taught in formal academic settings, or receive as advice from well-meaning friends and family, is rubbish. In some ways, it is worse than useless: entrepreneurs with transformational ideas are prevented from entering the business ecosystem: they are coached to knock on the wrong doors, they are taught to speak the wrong language, they are directed to travel the wrong roads. Dogged by their resultant failure to raise any meaningful capital, their spirits eventually flag. They give up, and the transformation that could have been is filed away in that sad folder where dreams go to diethe folder labeled If Only.

I had the advantage of starting my first business after a successful career as a senior executive with Wells Fargo Bank. As I gained experience as an entrepreneur, I was able to recognize patterns of effective practices, and this allowed me to systematize my methods into an orderly formula. Many of my start-up protgs have followed these steps in successfully raising their own capital, and these methods have proven portable to worldwide markets, with successful capital raises accomplished in the United States, Europe, Australia, and the Middle East.

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can save you not only a lot of time in fruitless matchmaking, but also a great deal of grief in avoiding a bad long-term marriage.

Dating is your new job. This secret collects the chaotic and emotionally draining events of the capital-raising cycle into an easily learned routine: its exactly like dating. This dating cycle will not resemble finding and marrying your high school sweetheart. Rather, you will assemble, over time, a network of sweethearts. And you will go on wooing and partnering with and occasionally getting dumped by old and new sweethearts alike, for as long as you are running a business, however large, however small. Your new job is dating.

to avoid fatal mistakes, and to discover breakthrough compromises on particularly thorny issues.

The wire closes the deal. In the final flurry of document signing, list ticking, and funds wiring, you will need to adopt the obsessive behavior of a flight controller landing a large passenger airplane during a storm.

Your deal is not closed until the funds are in your business checking account, and until that finality occurs, every unmanaged detail is a danger to the successful conclusion of your months-long journey to raising capital. will present you with a series of simple and time-tested procedures for managing the chaos of a closing without pulling your hair out in the process.

At the end of each secret is a summary of the key points covered. Following that section, I offer a common myth, related to the topic of each secret, which has caused thousands of entrepreneurs to be working down the wrong path.

It is important to note the small number of essential lessons here: there are six secrets, not twenty-seven. Because these lessons grow out of my own first-hand experience, I have chosen to be brutally brief leaving out everything that may be nice but is not strictly necessary. This approach is similar to the difference between a novice backpacker and an experienced one. As a novice, you decide to go backpacking for the first time and step into REI to have the salesman outfit you with everything he says you will need. Then, once you hit the trail, you find out that the load is simply too cumbersome to carry and most of what you brought along is, in the actual event, useless or superfluous. As an experienced backpacker, you travel extremely light and burden yourself only with equipment that is absolutely essential and proven to work. This book travels light.

These six secrets also follow an established order. Using these secrets out of their natural order will not work. It would be like swinging at a tennis ball after it has gone past you. You may have the most perfect tennis stroke of all time, but it does not matter if the ball is not in a position to be struck.

While the six secrets encompass each step of the raising-capital process, there is one essential trait that holds them all together: commitment. Because you cannot learn commitment, no section of this book is dedicated to it. Commitment is a choice that you make. Are you committed to building the business in which you want your investor to invest? If you are not committed, the investor can sense it. You cannot pretend to commit; it cannot be faked. That is why the smartest investors always want to know what capital of your own has been put at risk in order to build your business. This is the closest proxy the investor can get for measuring your commitment. Investors care about your commitment because they know you are embarking on a long journey, full of many surprises and disappointments. There will be times when only your underlying commitment will see you through.