Funding Sources – Wealthy Individuals
Karl Dakin
I help you overcome challenges to raising capital. Take advantage of my Motivated Money Method to identify those investor candidates that are most likely to invest. Top expert in fundraising.
Wealthy individuals have always been a possible source of funding for small businesses. Like every other source of funding for a particular business, they have to? meet my three key factors for investing:
1.???? The wealthy person and the entrepreneur know each other
2.???? The wealthy person has money currently sitting idle and has not already invested in another opportunity
3.???? The wealthy person is motivated to put their money at risk by investing in that small business
?My three key factors are generalizations that are only true some of the time. I use them to simplify my explanation of how to raise funding. Based on my experience raising money for over four decades, the exceptions to this generalization are few and rarely repeatable. The circumstances were unique to those situations.
?In this discussion of wealthy individuals as investor candidates, I will make some generalizations to aid in understanding, but in the same manner, that every single business is unique, and so is every single wealthy person. Even though the money they invest spends the same (unless it is cryptocurrency), each investor candidate is like a fingerprint. We all have them, but they are all different. I have seen the investment decision-making of some investors change between morning and afternoon based on their mood, fatigue, their meds, or new information.
?If an entrepreneur already knows the wealthy individual, there may be enough of a relationship that the wealthy individual may trust the entrepreneur with their money. If the wealthy individual is unknown to the entrepreneur, there is the possibility that a relationship can be formed over time that may set the table for an investment. An investor candidate cannot invest in a small business if they do not know it exists.
?Nearly all wealthy people can afford and have a financial advisor. This person is engaged in reviewing the financial situation of the wealthy person and giving advice on how they can stay wealthy. For this reason, financial advisors serve as a gatekeeper. An entrepreneur seeking an investment from a wealthy individual must also know and gain the trust of the financial advisor. Since the financial advisor’s job is to preserve the wealth more than it is to increase the wealth of the wealthy individual, high-risk opportunities are generally avoided.
?As a further challenge to the entrepreneur, the money of a wealthy person is generally already invested in selected opportunities, leaving no money currently available to invest in a small business. A pitch to a wealthy person often gets the response that they will consider an investment when the wealthy person has sold some stock, land, or other investment where the money is currently placed. A wealthy person cannot write a check to a small business without money in their bank account.
?The last key factor to be met is that of motivation. Since the basic concept of an investment is that the investor may gain an increase in value in the form of a return on investment, an entrepreneur cannot claim to a wealthy individual that investing in their business may make them rich because the wealthy individual is already rich.
?Since the wealthy individual is already rich, they or their financial advisor can be very selective in the opportunities they choose to invest. At this point, every business seeking investment competes with every other business. If a small business investment offer states that an investment may yield a return of 12%, that small business looks like every other business offering a 12% return. The offer of 12% is inferior to any business offering a higher rate of return. Keep in mind that the small business is not just competing with every other small business seeking capital but every other type of investment opportunity: real estate, solar farms, bank certificates of deposit, insurance annuities, etc.
?Every feature or characteristic of a business may be compared and contrasted with every other business:
·?????? Management team
·?????? Market
·?????? Products and services
·?????? Age of business
·?????? Current net worth
·?????? Projected value
·?????? Location
·?????? Community engagement
·?????? Charitable support
As stated earlier, every business is unique. Even two coffee shops operating on the same street are different. The wealthy individual and/or their financial advisor will look at these differences in investment decisions.
The challenge to the unique small business is to match with the unique investor who is sufficiently motivated to choose one small business over another. The motivations of each wealthy person are unique, and they change over time. Understanding motivations is the key to targeting investor candidates who are most likely to invest in a particular small business and lays the groundwork for crafting an offer that matches those investors.
Superpowers for Good
I had the pleasure of being interviewed by Devin Thorpe on his SuperPowers for Good show that is affiliated with the Impact Cherub Club and SuperCrowd. We talked about impact investing, investing in small businesses as a wealth-building method, and access to capital through investment crowdfunding. Devin advocates supporting small businesses through Reg CF crowdfunding and firmly believes that systematic investment ($100/month) in small businesses will build wealth at a rate comparable with more common investments in Wall Street or real estate.
The show may be viewed at the following link:
?Don Cohen
?I was a guest on Don Cohen’s show Wednesday. The other guest was Russ Hedge who is an expert on LinkedIn, in building crowds and obtaining sponsorships. We had an interesting conversation on the importance of relationships as assets and the need to build a community.
领英推荐
?Successful Funding
?I hosted my fifth Successful Funding show on Tuesday. My guest guest was 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 discussed the difference between avatars and chatbots, the use of artificial intelligence in supporting small businesses, and the great advantages that are attained when artificial intelligence can be customized/personalized with information not available to the public.
You may view all of the Successful Funding shows in my 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. You may register to attend by going on LinkedIn, searching for Events, clicking on the Events button, searching for Successful Funding, and then clicking on the Attend button. You should receive an email with a link to save to your calendar. You can also click on the Share button to obtain the URL link to the show and put it in your calendar.
?Founded in FOCO
?I will present 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.
?SuperCrowd 2024
?I will be co-hosting the SuperCrowd 2024 event: “The Impact Crowdfunding Event of the Year,” which will be held online on April 17th and 18th.
?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
?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
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I help you overcome challenges to raising capital. Take advantage of my Motivated Money Method to identify those investor candidates that are most likely to invest. Top expert in fundraising.
9 个月Wealthy people are investor candidates. Why they pick one investment opportunity over another is the key.