It Takes Time to Raise Capital

In assisting early stage entrepreneurs, I have noted that very early in my initial conversations about “great ideas and innovations” entrepreneurs inevitably will ask, “So, when can I get the money?” Clearly, that is an important concern that’s not often approached from an expectation perspective. I wanted to shed some light on the process of getting ready to raise capital in an effort to help us all manage expectations.

At JumpStart, my team works to accelerate the growth of high potential, minority-led companies to give them the best possible opportunity to attract capital. We want to do this quickly, but without sacrificing necessary steps. The time it takes to make sure a company is in the best position to attract capital is wholly dependent on a company’s unique situation. Working closely with an entrepreneur, we have to get through two very important main stages: preparation and execution. 

In the preparation stage:

• We push hard on validating an entrepreneur’s ideas, plans, concepts, markets and business strategy to make sure s/he has answered all the tough questions and made the appropriate assessments. We assist in identifying all issues and challenges to mitigate risk. 
• We make sure the entrepreneur’s value proposition is sound, there is a market and its size is attractive to investors, and there is a management team and advisory board in place (or at least a sound plan to get them in place).
• Our team helps prepare and “package” a plan and strategies in a form and structure preferred by investors -- normally through an “investor-ready” executive summary.
• We identify and focus on executing critical success milestones that best position the company to attract capital.
• We help entrepreneurs prepare and effectively articulate investor-ready presentations.
• And finally, our team encourages entrepreneurs to practice their pitches on experienced committees of investors who can critique the proposal and get them ready for real investor opportunities.

In the execution stage:

• We assist entrepreneurs in gaining access to networks of investors and venture capital firms, banks and other sources of funds. (In terms of timing, this is always subject to investors’ processes of receiving, reviewing and presenting.)
• Our team works to connect entrepreneurs to major first-client pilot opportunities that will further validate, prove out and move their businesses forward.
• We help entrepreneurs obtain letters of intent from additional customers.

Clearly, getting your ducks in a row to pursue funding takes commitment and time. But it doesn't stop there. Whether the money is coming from an angel investor, a formal investment firm, a bank, or a grant-awarding agency, the stipulations and schedules of these capital sources affect timing. Often this part of the process includes an application, presentation(s), evaluation, analysis and review, negotiation, due diligence and then, if all goes well, closing. And, just to make matters even more challenging, getting the funding commitment may be competitive. 

I recently read an article authored by my boss, Darrin Redus, who noted that in “the journey of raising capital there are no magic bullets or guarantees.” Entrepreneurs need to prepare themselves. Timing might not be under their control, either. But by better understanding the variables in the process, I hope entrepreneurs can better manage expectations around when they might get investment capital. 

Lamont Mackley is a Senior Advisor for JumpStart. Lamont spent most of his career in the banking industry, where he led three community banks as president and CEO. His ability to create environments of high achievement led to his selection as leader of two entrepreneurial businesses, providing him with insight into the challenges of managing such enterprises. These experiences fueled Lamont’s daily passion for working with and coaching entrepreneurs and their growing companies. He attended Boston University for his BS and Columbus School of Law, Catholic University, for his JD. He also has led a series of workshops and seminars on economic and business development.