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Navigating the ins and outs of raising money for your business is challenging, but not impossible, said Brad Bertoch, Wayne Brown Institute president.
Knowing how the process works can help you avoid key pitfalls, Bertoch said, during a “How to Raise Money in Utah” event held Wednesday afternoon.
The key thing to remember is perception is everything, he said. “It’s very important that you come across in a way that they (investors) feel confident and have confidence in you.”
To give investors that confidence, it’s best to prepare thoroughly and think through all the scenarios, said Larry Rigby, founder and CEO of Larada Sciences.
Angels and venture capitalists need to see that an entrepreneur has a good business plan and more than just passion for an idea, Rigby said. Most also want you to have some personal investment in the business too, to show you are willing to take risks for the business.
It’s so hard to get in front of good investors for a pitch that it’s a “one-shot deal,” he said. “This is a Broadway production and you’ve got to be so scripted.”
“And they have memories like elephants,” Bertoch added. Venture capitalists and angels are a tight-knit community with long memories, so never treat someone badly and always try to present the best possible image.
It is just a good idea to always treat people well, because you never know when they could be able to help you, Rigby said, recounting a story about meeting someone at his table at an event where he was trying to raise money. His table guest ended up giving him $800,000. “I had no idea I was sitting next to someone that wealthy and that able to cut a check.”
Rigby said it’s also critical to hire the best lawyer possible to make sure all the business paperwork is in order, because a sophisticated investor will require everything be done well.
Matt Thorne, an attorney at Holland & Hart, said there are many hazards when getting a business running. The most important rule to remember is get everything in writing, he said.
While everyone hopes their business will turn out well, many things could go wrong, and that’s why it’s important to have good legal advice, he said.