A startup might have a great pitch, business plan and product, but if they run out of money, things will come to a screeching halt. The Greater Des Moines Partnership is hosting a Raising Capital Seminar to help Midwest companies navigate the ins and outs of attracting investors.
The seminar features presentations by Charise Flynn (c.Results/Dwolla), Mike Colwell (Square One DSM), JD Geneser (LWBJ Capital Advisors), Matt Ostanik (FunnelWise), Sheldon Ohringer (Mango Seed Investments/Entrepreneurial Technologies) and Chris Sackett (BrownWinick).
Silicon Prairie News sat down with Charise Flynn, founder of c.Results and former Chief Operating Officer of Dwolla, and ran through some of the steps in raising capital, as well as common errors made by startups.
The time involved: Anyone who has run a startup knows that it’s not a nine to five job. Once you start factoring in raising money, you have to figure out how to do even more with your limited time.
“It’s easy to underestimate the amount of time it takes to successfully raise capital. It’s all consuming and becomes a full-time job. Going in, people don’t always realize that.”
Have a plan: Investors don’t just hand out checks because you have a snazzy name and website. What are you going to do with the money?
“If you take on a million dollars, what are you going to accomplish with it? You’ve got to lay out your plan very clearly to make investors comfortable.”
Polish your story: Don’t underestimate the power of a good pitch deck. Flynn stressed the importance of telling the story of your company in a way that’s appealing to investors. But don’t make the mistake of thinking a polished pitch and buzzwords will compensate for vague plans.
“It’s easy to get caught up in hype versus the fundamentals of running a good business.”
Midwest investors vs. the coasts: There are plenty of investors in Iowa and the surrounding states looking to put money into Midwestern companies. Attracting capital from Silicon Prairie or other hot spots has appeal, but it also comes with different expectations.
“Midwestern investors are maybe a little more conservative in how they want the money spent. You might take on a million dollars or five million locally, and the expectation is that will get you to profitability and you won’t need more capital. Investors from the coasts might offer five million to get to the next stage of your company, where you might need to take on $20 million to get to the next stage, then $60 million to get to the next. How that kind of capital impacts a company is quite a bit different and a lot more risky. An investor from the coasts might expect one in ten investments to be super successful, while local investors are more likely to think all investments will succeed.”
Talk with successful capital raisers: Thinking about raising capital? Reach out to other companies in the area who have been through the process. Their insights on the process could help you go through it yourself more smoothly.
“The best way to learn is through people who have gone through the trenches.”
Once you have the money: Raising money is tough, but once you have it you have to really prove yourself.
“Execute, execute, execute,” Flynn said of the next step. “You have to do what you were going to do. Now you’re accountable to pull off your plan.”
Raising Capital Seminar Information
Raising Capital Seminar
When: 8 a.m.-3 p.m. March 30
Where: BrownWinick Law Firm, 666 Grand Ave. #2000, Des Moines, IA
For more information, visit desmoinesmetro.com.
Joe Lawler is a freelance reporter based in Des Moines.