How not to increase traditional capital… How to increase “guerrilla” capital

We have compiled a list of some practices that are sure to kill your chances of attracting investors. Ignore these lessons at your own risk.

* Poor market research, weak business plan

* An unfocused, “shotgun” approach that VC sources should approach

* You do not have enough seed capital dedicated to the capital raising effort

* Does not allow enough time to raise capital

* Seeks too much capital, or establishes too large a minimum initial investment for the project or company.

* It does not have enough own capital committed to the project.

* You do not have a clear picture about the use of income.

* Does not have a projected rate of return on investment

* Does not guarantee an exit strategy for the investor

* Does not have a strong management team formed

Even when early funding is secured, the entrepreneur can make strategic mistakes that make follow-on investment less likely.

* Not raising enough capital early enough in the game.

* Participate in capital spending before adequate capital is secured.

Denied traditional routes to venture financing, many entrepreneurs will turn to techniques often referred to as “guerrilla” financing:

Business opportunity announcements. Place advertisements in a local newspaper or a national publication that features such advertisements. Indicate the amount of money requested, the type of business involved, and the type of return that is projected.

Investment “party”. Have a party to explain your business plan, profit potential, and how much you need to your friends. Give them each a copy of your prospectus and ask them to pledge $1,000 as nonparticipating partners in your business. Consult current tax regulations.

Occupational investment groups. The next time you talk to your doctor or dentist, give them a brochure and explain your plan. They may invest or may schedule an appointment for you to speak with the manager of your investment group.

Non-profit support groups. Many areas have Small Business Investment Companies and Business Development Commissions whose goal is to assist in the establishment and growth of new businesses. Many offer money or facilities to help start a new business.

Money brokers. They circulate your prospectus to various well-known lenders or investors. They typically require an initial or retention fee, then take a percentage of the gross amount that is ultimately procured for your needs. There are no guarantees of success.

Strategic partners. Consider merging with a company that is already organized and has facilities that are compatible or related to your needs.

The person determined to succeed will use all possible approaches.