“Learning is a treasure that will follow its owner everywhere.”
Even billionaires need to raise money. Take Elon Musk. Each time he launches a new company, he raises outside money for it. Why? Because why should he only invest his own money? Rather, Musk and other billionaires understand the importance of leveraging other people’s money.
So, what do billionaires like Elon Musk do to raise money? Below are three key tactics billionaires use, and perhaps more importantly, that you can too. (I’ll shart the final two tactics with you tomorrow.)
- Leverage Relationships
Billionaires have lots of relationships that they leverage when seeking capital. They access their networks by telling them about their latest project and their funding needs.
You too have relationships. You have current and/or former bosses, co-workers, counsel (e.g., accountants, lawyers, etc.), family friends and so on. Leverage these relationships when seeking funding. Even if none of your current relationships can invest directly, some certainly know and can introduce you to others who can.
- Get Creative on Deal Terms
A great investment makes sense for both the investor/lender and the entrepreneur. Oftentimes, in ensuring the investment works, you need to get creative on the deal terms.
For example, maybe you give the investor a small equity percentage in your business, monthly repayment of some of their investment, AND a small percentage of your venture’s future sales. While most investments only include one of these funding options (e.g., debt/loan, equity, or royalty payments), there’s no rule that you can’t get creative and combine deal terms. And when you do, you often make your deal/company more appealing to investors.
- Sell Investors on the Opportunity
Regardless of how good your company or investment opportunity is, you need to “sell” it to investors and lenders. Billionaires like Elon Musk must also do this. For instance, Musk constantly convinces investors why his newest venture will be a huge success.
Marketing yourself and your company to investors is a crucial part of raising capital. You must prove to investors why your company will be successful and that they will get a solid return on their investment. Importantly, when “selling” investors, get specific. For example, don’t just say you will succeed because you have the best management team. Rather, explain the precise credentials of your team that make you the best.
Funding to Start & Grow Your Company
Do you need funding to start or grow your company?
If so, don’t go at it blindly.
Rather, you should use my proven funding strategy:
Yes, you can raise the money you need to start or grow your company.
But you need to raise it in a certain way.
Today’s Question: In economics, what type of commodity is a Giffen good which violates a cardinal law?
Previous Question: In the United States, Keogh Plans are full-fledged pension plans for what type of people?
Answer: The self-employed.
Named for U.S. Representative Eugene James Keogh of New York, they are sometimes called HR10 plans, and are different from Individual Retirement Accounts (IRAs).
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