Raising funds, that’s easy. Knowing where to raise, that’s very hard.
About the author: This is a guest post by Collin Caneva (left), founder and CEO of Lincoln, Neb.-based Green Bein’ Productions, a media production company that specializes in adding digital interaction to existing marketing efforts.
I've been asked a number of times about raising money in this market. I’m not really sure that I’m the guy to turn to for advice, as what’s worked for me, might not work for you. Everyone's different.
First off, the obvious: I don't live in Silicon Valley, New York City, or Austin Texas, etc. So the stories I hear that go like, "I had drinks with so-and-so, told them my idea and right then and there raised $1 million to produce my widget." I'm not sure if that’s how it really is in other places, but if it is, no thank-you. (Remember "easy come, easy go"?) Or the stories about putting together pitch decks, detailed business plans, elaborate presentations, and making sure to drop the right buzz words… not for me either. I'm not saying you don't have to plan your business, or be prepared for those meetings, because you do. What I'm saying is that your idea has to be READY for those types of meetings.
I think many presentations are premature. I think any creative with some editing and content skills can whip up a stellar presentation, but smoke and mirrors shouldn't be what sells an idea. Traction is. We all know that we need money to get our idea shipped, but there's a balancing act to decide what kind of money to take. I mean, you have to know when you're ready to take on big money, because I think that taking on the wrong money at first is the worst thing a person could do for their startup business.
I remember my first "pitch" to someone outside of my immediate circle. It was a group of men made up of a retiree, a father-son team that own an established well/agricultural irrigation company, a farmer, and a man that owned a construction company. When I started talking and tried showing them my idea, NOTHING worked right. The internet sucked, so I couldn't even show them my product. (I doubted that they came to meet me to listen to me ramble about how I think I can change a small portion of the internet.) Within five minutes of starting my "pitch," I realized something: I don’t even really know these guys. So, I asked them a question. "Tell me about you, what’s important to you?"
You know what? I learned that they were passionate about a number of things: their family, their land, their faith, their pride of how hard they’ve worked for what they’ve got, and they even told me about their grand-children and their personal hobbies. I closed my computer and explained to them that everything that they've mentioned is the reason for me starting my business, because I think that my team and I can carve out a space on the web that their children and grand-children can play, learn, and even make a difference. I explained that not only was my team building a product, but a platform that other's could use, as well. I left that meeting with $300K.
It was the scariest day of my life. Not because I had to explain my idea. (Hell, I love doing that!) But because I now had in my possession, the trust and money from a group of guys that weren't investing in what they saw on my computer, but what they saw in me. It was that day that I realized, I’d better be damned sure that I can be resilient enough to with-stand more failure’s than successes and be able to pivot when needed, and to do whatever is necessary in the long-term so I don’t lose this group's money. (I'm not sure many are as passionate about their investment group as I am of mine.)
Knowing where to raise funds
The point of this isn't to tell you that if I can do it, you can. The point is that I'm doing something that is very hard to do, and I’m not talking about raising funds. That's easy. I'm talking about knowing WHERE to raise funds. (I've raised close to $3 million to date to get my company to where it is. Which is being months away from launching a platform that will enable brands to create their own social, 3-Dimensional/interactive communities. A platform that can be used in the sports space, the career services space, the education space, the music space, the education space… the possibilities are just about endless, and we are gaining some really great traction.)
You see, I know our resources are limited in our area. There's just not a lot of VC firms out here. The ones that are here, are fairly new to this game, too. Albeit, very good at what they do, and ran by very smart, genuine people… they're relatively new to the VC world. There's also "Angel Investors." But I've found that the name "Angel" can be deceiving in some cases. But remember: it's THEIR money. The golden rule has always been: "He with the gold, makes the rules." Any Angel or VC is going to have guidelines that you must follow if you want a piece of their money. For me, I know that my product is simply not ready to conform. (Notice I didn’t say I don’t WANT to conform I said that not READY to conform yet and I don’t want to waste anyone's time.)
My take: There's a TON of money in the mid-west. More than any of us probably realize. But if you have the brass monkey’s to come up with an idea and try to execute on that, you have to have the skin to hear "No." A lot. I've heard that word so much, I'm numb to it now. If I got discouraged every time that I hear "No" on a weekly basis, I'd be institutionalized right now. You have to know something: most people with money, whether they're an "Angel," a VC, or merely a friend/family investor, they WANT to invest in you. They WANT to see you succeed. They WANT to succeed with you. But they didn't get to where they're at because of making dumb decisions – investing into products that aren't ready, or not conforming to their rules, would be a dumb decision.
A man once told me "Collin, think of Green Bein' as a round peg. Well, I only invest in square pegs. Good luck bud." At the time I was a little discouraged, but now I realize the importance of what he was saying and I only look for investors that invest in round pegs. I also know this, set as many appointments as possible. Talk to everyone that you can. Aim to do your best in every one, but expect to hear "No" for all of them. Trust me, the one that says "Yes" will be worth it.
Credits: Photo of Collin Caneva courtesy of Caneva.
About the author: In all things, Collin Caneva is energetic, passionate, and loud. Which makes him an unstoppable entrepreneur who pushes forward, despite the odds while confronting and enjoying the hilarity of it all. He is intensely driven by his goal to change the way companies use internet marketing and online gaming to engage and grow customers. Caneva has been described as one of the best front men for a tech start-up because he is a fearless networker and adrenaline-fueled leader.
Canvea lives in Lincoln, Nebraska with his wife and three children. He founded and serves as CEO of Green Bein’ Productions, Inc., and is involved in other area businesses, as well.