Raising Money For Your Company with Eben Pagan

Fundraising takes significantly more time than most entrepreneurs expect, often up to six months regardless of the amount being raised

Eben Pagan states it 'could take up to six months to raise money that's been the case in several of our fundraising efforts' and that 'people say yes and then it takes it could take three months to actually get them to write that check'

Use established legal forms for investment agreements rather than creating custom documents to reduce costs and complexity

Eben explains 'this stuff has been done a million times before so any law firm any corporate law firm you know worth its muster will have these forms ready to go you don't have to pay huge amounts of money for these things'

Hire fundraising assistance for around 5% of the raise amount, especially former lawyers or investment bankers who can introduce you to their networks

Eben recommends 'for a relatively modest fee something in the range of 5% um of whatever you raise they'll be willing to help you out introduce you to their Network'

Investors often invest in people and passion rather than complete understanding of the business model

Eben shares story of 1995 earthweb investor who said 'I have no idea what you're talking about that's why I'm investing in you' because 'he liked the passion we had for the business and liked what we were saying and liked our commitment to it'

Only accept money from investors you trust because every company experiences ups and downs that test the investor relationship

Eben emphasizes 'you should only take money from people who you trust because any experience in a company is going to be up and down there's going to be an up and down in every company'

Align time horizons with investors to prevent conflicts about when they expect returns on their investment

Eben explains 'how long do they are they expecting their investment to be in the company before they're going to want a return on it um it might be one year it might be 10 years and there's no right or wrong to this but you just have to be on the same page'

Match dividend expectations with your business model - technology companies operate at losses initially while restaurant chains can provide earlier returns

Eben contrasts 'for a technology company that operates at a loss for a period of time before it hits that curve that's going to be a tough thing to deliver on a dividend' versus 'a restaurant chain that you're opening and you you know you first six months you're investing and next thing you know you you hit some profit okay then maybe you can give an annual dividend'

Understanding investor mentality and mindset prevents 90% of potential problems throughout the life of your company

Eben concludes 'you have to know the mentality and the mindset of your investor that comes in that will avoid I think 90% of any problems you might have uh with that particular you know with the with the life of your company'

Raising $1 million can sometimes be harder than raising $100 million due to investor expectations and deal complexity

Eben Pagan specifically states 'it's sometimes it's harder to raise a million dollars than it is a hundred million do it sounds crazy but it's true'