Tuesday, January 19, 2010

Raising Money is Easy... provided you throw out Logic and Reason

Raising Money is easy. It's just like playing the stock market. Valuation is based on non-math that is impossible to understand or accurately model. Terms are based on past fears and future unrealities. As long as you are willing to ignore science, math, history, and logic, you can raise money with ease! Here are the Top 8 ways to raise money for your new venture:

  • 0. Build incredible Buzz and Hype. (this can have a big effect on Valuation)
  • 1. Build gigantic hockey-stick financial models (or you won't even get a meeting).
  • 2. Use Harlan's un-patented, "laser-beam" shotgun approach... e.g. reach out to every investor you can find that "might" do an investment in your company. (e.g. has a history of investing of companies like yours).
  • 3. Spend lots of money and time on your presentation... make it 10 slides they will never forget.
  • 4. Have something built... even if it barely works.
  • 5. Have at least 1 customer... the more the better.
  • 6. Ignore the rules of Math and Logic... and accept the valuation proposed! (it's probably higher than you deserve)
  • 7. Ignore Logic and Reason... and accept the terms proposed. (even if they make the valuation irrelevant)

If you can stomach 6 & 7, you will raise money!

If you are like me, and engineer, you will fight and fight, and end up with slightly lower "valuation" (probably valuation based more on reason), and slightly better terms (based on trust and logic)... but it will take longer and be much harder to raise money. Do the easier thing, give up on your principles! /sarcasm/

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