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Broadscope

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Raising Capital in 90 Days? Not a Chance.

August 8, 2018

 

Can you raise capital in the 90 days that's so often quoted? How long does it really take?

 

Let's figure it out.

 

Actual Starting Point

This is the point that you start to raise capital in earnest—a full-time effort. You need to create the three triad documents that we’ve talked about in past posts: Outline Business Plan, Strategic Financial Planning Model, and Investor Presentation deck.

Time needed: Sixty to ninety days.

 

Practice Presenting

After completing the triad documents, you’ll need to practice delivering your investor pitch, passing the straight face test, and hone your deck.

Time needed: Fifteen to thirty days.

 

Key Point: Allocate one hour of practice for every minute of presentation to investors. That’s thirty to sixty hours of focused practice before you deliver your first live investor pitch.

 

Defining Investors

You need to determine which investors are the best fit and the most likely to fund your company. Variables include industry and product focus, the expertise of the firm and of each partner, investment series in which they actually participate, industry connections, your ability to get a warm introduction, and many others. You'll need access to an investor database to gather this information.

Time needed: Fifteen to thirty days.

 

Queue Time

If an investor is interested, you'll need to present at least once or twice more after your first pitch, likely to a wider audience and the investment committee. Queue time will add up for scheduling with anyone who's out of your direct control during the process.

Time needed: Thirty to sixty days.

 

Term Sheet

After your last pitch to the investment committee, you may have additional conversations with your investment partner and get a term sheet.

Time needed: Fifteen to sixty days.

 

Due Diligence and Close

Once the term sheet is signed by all parties, investors will want access to your online data room and start due diligence. Diligence can be a relatively high-level exercise or a deep dive.

Time needed if everything is clean: Thirty to ninety days.

 

Total Raise Time

So what's the real amount of time to raise a round of capital? If you're on top of the process and it goes reasonably well, it usually takes six to twelve months.

 

Key Point: The average time to raise a round of capital is six to twelve months.

 

I’m frequently asked if I can do a capital raise in a less than six months. I’ve done it, so I know that it’s possible. Nevertheless, I recommend you plan for longer so that you don’t run out of cash.

 

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Do you need help with your capital raise? Want to understand the timing specific to your product and ways to decrease your raise time? Schedule a one-hour call with us here.

 

All the best,

 

 

 

 

 

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