Funding Capital Campaigns

It may sound strange, but I am frequently contacted by entrepreneurs wanting to raise millions of dollars who have no money to cover the cost of a capital campaign. Some of these believe in the urban myth that because they have declared themselves as entrepreneurs the world will step up and provide them with everything they need. Others assume that investors will see the potential of the entrepreneur’s business opportunity and overlook issues of unvalidated technology, unproven markets, and leadership with little or no experience. This still leaves a fair number of entrepreneurs who do not have the money needed to share their stories to raise funding effectively.

?Too often, these entrepreneurs will borrow money, placing their personal lives and businesses at risk, and go on a pilgrimage of angel pitch events, hoping that someone in the audience will race up to the stage and throw money at them. This commonly occurs after paying a ‘pitch fee’, submitting all of the documents that attempt to support projections with high rates of return, and then going through a qualification process that is just that – a process. The metrics used in the selection and the people making the selection are usually unqualified to pick winning business opportunities – they simply make a pick. My criticism of this process is that this game is designed to help investors pick a business to invest -not to help a business obtain an investment. This means one business wins, and all the rest go home regardless of their merits.

?Instead of focusing on the virtually impossible goal of instantly raising millions of dollars, the entrepreneurs may consider setting a more attainable goal of raising the much smaller amount of money needed to conduct a capital campaign.

?It is often said that it takes no more work to raise $5 million dollars than to raise $500,000. This is basically true. The conduct of a capital campaign has many tasks to be completed regardless of the capital goal.

?The conduct of a capital campaign requires a small business to invest time and money. A business must be able to explain the opportunity and how it will operate to realize its potential. The business must show that its management team has what it takes to perform all of the operating activities to take it from its current status to a level of success. Information on the management team, the products and services of the business, and the marketplace of customers must be presented. To the extent it exists, this information is supplemented with financial information, a cash flow projection, and a statement of all the risks that may prevent the business from attaining the projection. The small business leadership team should be able to gather and present all of this information without outside help or costs.

?To identify investors, craft an offer that will attract investment and conform to applicable government regulations, development and share promotional materials is where the small business may begin incurring costs over and above the time needed to manage the capital campaign. These activities commonly include accountants or auditors, lawyers, and brokers.

?This cost may range from a few thousand dollars to hundreds of thousands of dollars. Regardless of the dollar amount, raising money just to pay for the capital campaign must be much smaller than the campaign’s capital goal.

?Since the capital campaign is intended to raise money, the money from the capital campaign may be used to pay for the campaign. This means that the campaign may be bridge-financed. A small business must create a capital campaign plan with a budget that details all expenses incurred in conducting the campaign. This budget may include the time of the small business leadership allocated to the campaign.

?The capital campaign plan may be converted into a micro-funding offering. Because of the smaller dollar amount and the prospect that the money may be paid back within a few months, the small business may target a different investor group than the one targeted for the large dollar campaign. The offer may be in the form of a short-term loan, equity in the company at a lower price than the larger dollar campaign, or some combination thereof.

?Successful Funding

?The next show of Successful Funding will be on February 20 at 8 am MST. My guest will be Emiliano de Laurentiis. Emiliano is the founder and CEO of Knowledge Avatars. It offers services in creating artificial intelligence learning management systems (AILMS) that can be customized to share selected information in the manner of a digital receptionist or sales assistant. We will discuss how using artificial intelligence and avatars can aid a small business in its operations and raising capital.

?You can register to attend at: https://www.dhirubhai.net/events/successfulfunding-aiavatars7163296460380233728/theater/

?Michael Podolny was my guest on yesterday’s Successful Funding show. Michael is the Founder and CEO of Theodora Africa – a nonprofit that trains women in Africa to be virtual assistants and then arranges the sale of their services to small businesses in the United States. The availability of these services can be a great help in filling the gap in support personnel while having a positive impact on the lives of these women in Africa.

You may view the show in the posts on my LinkedIn profile at: https://www.dhirubhai.net/in/karldakin/

?The Successful Funding show will repeat weekly at 8 am MST on Tuesdays on my LinkedIn profile.

?Founded in FOCO

?I will be presenting a workshop on the topic of What is Your Funding Potential? on March 8 from 11:00 am to 12:30 pm in Fort Collins, Colorado at the Founded in FOCO event.

?https://foundedinfoco.com/about/attend/#rsvp

?SuperCrowd 2024

I will be co-hosting the SuperCrowd 2024 event: “The Impact Crowdfunding Event of the Year” held on April 17th and 18th online.

?https://thesupercrowd.com/supercrowd24

?Motivated Money Half-Day Workshop

?Subscribers to the Instant Funding Newsletter are invited to attend a half-day workshop where I will present my Motivated Money Method to raise capital. Subscribers qualify for a 20% ($100) discount from the standard $500 price. Use the discount code: Instant Funding

?https://dakincapital.com/event-5422390

?Thursday, February 29 -? 9 am to 1 pm MST - Zoom Online

?The workshop will instruct on the Motivated Money Method of raising capital that targets investor candidates who are 'most motivated' to provide needed capital. Attendees will receive a workbook, templates, and a video recording of the workshop. A single organization may have up to three representatives may participate for a single registration fee.

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?Karl Dakin, the Capital Coach

Dakin Capital LLC

[email protected]

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