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Advice on Raising Venture Money

Duration: 4:20 Added: Nov 5, 2009 Channel: Stanford ECorner
Rating: (0 ratings) Views: 0 Category: Business
I think what you’re going to find out, that it depends on the situation. And the situation really is driven by three macro buckets. One is what you have to offer, how special it is, how dear, how much everyone wants it, how much sort of demand there is for the business that you're trying to build. Two is effectively the market. You know, what's the current situation in the marketplace? That dramatically changes, sort of, that balance. And then three is what your goals are, what you're trying to build in terms of a long-term relationship. And I think if you start off and you say, "I'm in a situation where I'm trying to raise money and it's very difficult to raise. I've got an idea, but I don't have a business," and people are looking at you and saying, "Well, you're a really smart person, but you don't have a track record. You never demonstrated you could do this before." It's a challenging time to raise money, and I think the tips I would give you is, you know, set a very wide net and to make sure you get a lot of that back because it's going to be a challenge to get that done. I'd also tell you that's not my preferred method. I wouldn't recommend to people trying to raise money very, very early in a venture because the whole nature of that balance is very hard to do. If you don't have a history with folks, if you don't have the track record to prove your ability to be successful in that business, it's hard to raise venture money, you know. And then you can end up going to less quality firms with less quality deals. I don't find a lot people that say, "The best thing I ever did was raise money very, very early." But you meet a lot of people on the other side that talk about the mistakes they made trying to raise money before they were ready. So I would put a lot of focus on, you know, understanding what power you have, what economic and market power you have for your idea. Two is the marketplace. I mean, there are times where it's just very difficu...

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