Launching the $$ Attack – And, With No Funds | VENTURE FINANCE – REALITY VS. RUMOR

Sunday, June 26, 2011

Launching the $$ Attack – And, With No Funds | VENTURE FINANCE – REALITY VS. RUMOR

Venture Finance - Reality vs. Rumors with Dick Brown

Since my very first column, I have railed against naïve entrepreneurs that have no experience; or a prior track record and little money that remain convinced that they easily can raise capital for a new venture. My “odds book” has 10 to 1, against.

But, Just This Month … Listen up, You Dreamers! This month’s column is “your time” and although the odds are still heavily stacked against you, here is one innovative, low-cost scheme that just might succeed.

The USPS Ploy:

For $190 you can visit your local US Post Office and buy a permit for something called a Business Reply Mail (BRM) permit. These are the self-addressed mailers that fall out of magazines when you open them. If you fill out the card with your address and drop it in a mail box, the USPS will deliver it, collect the mailing fee from the magazine publisher and you’ll eventually receive whatever was promised … a gift, free magazine subscription, drug sample, or a host of other things.

How can you use BRM’s in your marketing campaign to raise capital?

Simple: What’s the single, toughest portion of reaching potential investors such as VC’s and merchant banks?
Answer: Getting someone to open your Executive Summary and actually read it. (These people are buried by the daily emails that contain many BP’s and ES’s. Consequently, most of these emails are discarded without being read … or at best casually scanned by junior staff members.)

However, letters personally addressed to members of the firm are usually opened by the addressees … and, as any “old direct- marketing man” will attest, the entire success is measured by getting people to open their mail.

Thus, using this technique and targeting executives by name and title will substantially increase the eyeballs perusing your ES and then requesting a copy of your complete Business Plan. With careful design, your mail piece will consist of a brief note on handsome stationary, your Executive Summary and a color-coordinated BRM that simply requires the recipient to fill out their address (or just staple their business card) and drop in any mail box.

This very simple, time-tested technique works best for those ventures that seek financing from “professional money sources”, such as VC’s and merchant banks - generally, a minimum of $2.5 million, since they usually have a published address, organization chart and central mailing address. Angels and other “individual” sources of funds not only require compliance with state and federal securities laws but also raise a whole different set of legal problems; and, add the complexity that the individuals may not share a single, mailing address thus allowing for mail to be lost or not delivered to the right people.

This technique should not just be used for direct mail. At all times, you and all the members of your team should carry 10-20 of these effective “promotional pieces” that have:

An envelope,
An Executive Summary (Maximum of two pages)
And, a BRM.

Giving a potential investor this “takeaway” is 100 times more effective than the best “elevator pitch” … where the potential investor totally forgets what you’ve said within five minutes and puts your story in their hand, printed. Also, you’ll have many opportunities a day to hand out these materials.

Enhance this technique with slick, personal direct-mail pieces and you have a simple, effective and cheap marketing campaign!

Also, never forget or ignore the other basics such as:

Matching, attractive “sales support” materials – including a complementary PowerPoint presentation.
An initial, professional “web page” … plus, business cards and stationery.
Solicit and distribute testimonials for you, your team and the products or services you’ll provide.
Develop your “sales team” and practice your presentations– and, it’s critical that all your people help you raise the funds you need.
…. Etc.

And, this is only one classic tool that you’ll find listed in any other column, article or book about selling anything.

Other benefits include soliciting VC’s, merchant banks and investors beyond your geographic location since today two factors have changed:

The sheer number of investors has grown while the availability of reasonable deals hasn’t changed all that much.
The investor community has expanded geographically (or created many alliances) and today clever entrepreneurs can generate investment inquiries from all over the US, if not all over the world.

So, to succeed in closing the required funding you must now expose your venture to many more potential investor groups and not limit your search to a small portion of North America, but project out to profit-driven investors across both Western and Eastern financial investment cultures.

Of course, direct mail sharply increases the amount of preparatory work required by successful entrepreneurs, but it will also very substantially improve the probability of success.

You can find detailed descriptions and examples of BRM marketing (and other techniques) in AW’s book: How to Raise Money, Insider Edition as well as “everything you’ll ever need to know to raise money”. It includes extensive tips on how to raise money, including the common pitfalls that await the unwary entrepreneur. It costs only $9.95 and is available as a downloaded file at www.amerwld.com.

Finally, A Brief Commercial!

Dick’s consulting company is American World (AW). His web site is www.amerwld.com. You can reach him at dick@amerwld.com or call at 843-237-9802.

Now, AW introduces the “Entrepreneurs’ Edge” (EE) - a complete service for entrepreneurs that seek funding. EE begins by providing a real-world "Investor's Review" of your Executive Summary and Business Plan followed by the creation of an appropriate "Financing Strategy". Next, AW distributes "your story" with a unique, eye-catching introduction to 800+ of our world-wide list of qualified investors. AW will then continue to work with you to close your financing.

If you have questions, comments or suggestions, send them along. Contact Dick at American World, dick@amerwld.com). You’ll get an answer.

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For more information, please visit Dick's TNNWC Bio.

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