February 8, 2021

Capital Raising Worst Practices: Part 1 – Conducting the Casual Capital Raise

Casual Capital Raise

A 5-part series on the pitfalls and missteps to avoid when raising capital and a blueprint to doing better, this one on the casual capital raise!

I’m all about being casual in certain areas of my life. Come have a look at my laundry basket.

That said, raising capital is not one of those areas. This is where I must be surgical.

I recently raised $30M. These are the first words “announcing” that. Note: must get better at PR.

All in all, it took about 15 months—8 months from when I really pressed play and went to market.

This was not my first time raising capital. It’s always a challenge, as it should be, and you need to be ready to embrace it.

There’s nothing casual about it 😫 

As I like to say (or just came up with for this post), Casualization is not Capitalization. You’re either raising or you’re not.

If you’re not ready to raise, recognize it and put it out of your mind. Raising capital is distracting enough when you’re actually doing it. Don’t let it distract you and your team when it’s not yet time. You have more important things to occupy your brain and execution efforts.

If you’re not able to put it in the icebox, you run the risk of conducting the casual capital raise, which runs completely counter to driving a successful outcome with any semblance of efficiency.

Here are some hallmarks of the casual capital raise:

  • You’re unprepared

You haven’t put in the time doing your homework and getting your shit in order. I can’t stress enough how important and enabling it is to come prepared. It makes things flow so much smoother and dramatically reduces the burden on you and your team. Take the pain upfront, put in the work, create the materials, organize them, get some process going. You absolutely need it to be successful. Without it, you’ll be flailing and sending the signal that you’re not really serious or capable of getting a deal done.

  • You’re too slow

You should never be the one holding up a capital raise. That’s the job of (bad) investors. Your job is to drive timelines, force the issue and get people off the fence to a yes or no. This requires focus, hustle, and organization, none of which come along with being casual about any of it. I’m not saying you need to be an asshole or super aggressive, but you need to be in the driver’s seat pushing toward an outcome.

  • You’re too passive

Once we’ve built a modicum of a budding relationship, engage and qualify me. Put me on a drip. Keep me informed. Put reminders in your CRM. Follow-up. Make asks and put me to work a bit. Manage me through your process and kick me out if I’m not delivering.

If you’re not doing this, it’s hard for people that want to help to actually do so and they ultimately lose the impulse. If you are doing this and don’t deliver on your end by putting my work to work for your benefit, I lose the inclination to provide future support and focus on others who are delivering on their end of the bargain.

  • You’re confusing people and turning them off

Folks providing capital talk with each other and oftentimes are talking with the same Founders. You don’t want conversations like this happening “Yeah, I talked with [name] a couple of months ago, good call, said they were raising $3M and plan to close by end of June. Haven’t heard a peep since. [Investor name] said the same. Not sure what’s going on over there….” 

People talk, form opinions, and focus elsewhere. Without you necessarily knowing it, your raise has been deemed as stale or not really happening. Ultimately,  you’ve ceded your control over the process which can be hard to claw back.

Here are some of the negative perceptions that the casual raise conjures:

  • You’re not confident enough in yourself to go out there and make people believe in you.
  • You’re lacking conviction in your business that it’s truly deserving of someone’s money.
  • You’re following someone else’s agenda, who is telling you to raise money (friend/network, advisor, media).
  • You’re in over your head and it’s not yet clear whether you’ll sink or swim.

In closing, don’t get distracted by the lure of capital. Don’t be unduly influenced by others pushing you in a direction you or the company is not truly ready for. Don’t kick the tires on a capital raise just because it’s what a CEO “should” do. Be honest with yourself and check yourself regularly.

Believe me, it’s easy to succumb and it’s easy to fail. I’ve been there, so stay strong and focused. When you feel you and the business are ready to seek external capital, you should have the requisite confidence and conviction to succeed.

Oh, and hit me up at that point and we can see if Bigfoot can help out.

How do you feel about the casual capital raise? Next up in post #2 in our series, I’ll outline a 10-stage execution process for raising capital.