We’ve helped a number of clients develop business plans and raise capital from “angel” investors, corporate entities and venture capitalists during last 6-8 years. It’s always a daunting process that can be full of pitfalls and require a tremendous amount of work – but it can be done! Here is some perspective gleaned from years of experience.

The most important rule for raising capital to consider is: it’s never easy to raise capital when you need to! Meaning, investors are inherently risk aversive, can be very picky (a real understatement!) and they are looking for best deal with greatest upside and minimal risk.

Rule number two – don’t raise capital! Self fund your company (called bootstrapping in entrepreneur-speak) by finding customers that will purchase your products and services. This enables you to involve your most important business asset in your business from day one – customers!

Rule number three – use “FAF” or “VMC” methods. Raise seed (early stage) money from your friends and family and/or if you are really committed, pull some cash from a Visa or MasterCard. These methods can and do work for many entrepreneurs – be aware it can be very painful on back end if your company does not make it!

Angel investors can add so much to your company – they can bring “intelligent capital” to business. Not only do they invest capital but will very often take an interest in helping you grow company by taking a Board of Directors seat and/or temporarily assuming a senior management role.

In my experience finding and recruiting a blue chip management team with advanced degrees and a strong corporate pedigree can sometimes kill a startup as quickly as no cash or revenue – yes, they look great in your business plan and venture capitalists love a “strong team.” But, you need “fly by seat of their pants” manager/leaders who don’t need to grind five sets of scenarios (analysis paralysis) before they can take action – hire entrepreneurial types who’ve excelled in small companies.

Dealing with venture capitalists can be a significant challenge that is fraught with risk and no upside! Remember, they are highly skilled at entire process, in most cases they’ve done it hundreds of times before. So, your on their turf when you step into this arena and you better do your homework properly (market size, revenue projections, cost of sales, marketing plan) and/or consult with a consultant, attorney or “angel investor” who has been through process before to give you guidance.

Love: The Killer App

"Love is act of intelligently and sensibly sharing your knowledge, networks, and compassion with your business partners." --Tim Sanders, Chief Solutions Officer, Yahoo

Yahoo senior executive, Tim Sanders, published a book on Valentine's Day titled Love Is Killer App: How to Win Business and Influence Friends. In his book he explains that road to prosperity is paved with a commitment to generosity. He believes that what business world needs is less greed and more love. "When you help others grow to become best people that they can be, you are being loving -- and as a result, you grow. The most powerful force in business is love. It's what will help your company grow and become stronger. It's what will propel your career forward. It's what will give you a sense of meaning and satisfaction in your work."

Sanders believes there are three critical drivers of professional success. He calls them "three elemental particles of love in business." They are knowledge, networks, and compassion.

Knowledge: We must learn as much as we can as quickly as we can and then aggressively share that knowledge with others. Sanders says "that means taking power of ideas seriously, reading books voraciously, and developing a system of organizing what you've learned. To be an impact player in business, you simply have to know more than most other people know." One of tremendous benefits of sharing your knowledge with others is that they will be eager to give you helpful feedback in return. "They'll tell you which ideas worked out well and which didn't work out so well. They'll tell you which contacts were helpful and which weren't. They'll keep talking to you. And you'll keep learning from them. It's a loop."

Networks: Our knowledge does not hold much value if we don't have a network of people to share it with. Sanders encourages us to expand our network of people who share our values, and to connect as many of them with each other as possible. Success is based on people we know. Everyone in our contact database is a potential partner for everyone we meet. The value of our network is in our willingness to share it. The purpose of collecting contacts is to give them away … to match them with other contacts. Sanders notes that those who appear insignificant today "may be stars waiting to rise. Someday, they may become key nodes in your network -- and create a huge opportunity for you. And they will remember that it was you who was on their side before everyone else was."

Compassion: Most important, Sanders says, is to "be as openly human as you can be and find courage to express genuine emotion in harried, pressure-filled world of work." We should behave this way, not because we expect something in return, but because it's right way to behave. Sanders notes that "the less you expect in return for acts of professional generosity, more you will receive." Your success is a direct result of their success. Lennon and McCartney said it better than anyone else: "In end, love you take is equal to love you make."

Authentic Promotion