What If You Don’t Raise All the Money?
My offering documents allowed me to close the deal at $800,000, although that would’ve significantly changed my plans. I didn’t want to get most of the way there, only to have to return everyone’s checks because I didn’t hit my goal. Ultimately, I would’ve been happy opening a 10bbl brewery, even if that isn’t everything I’ve hoped and dreamed about.
How Many Rich People Do You Know?
Assessing how much you can realistically raise must be an utterly unemotional process because it has absolutely nothing to do with fairness. Profoundly unworthy businesses (and breweries) succeed at raising vast sums of money all the time, and yes, this is depressing. But you’ve got to play within your own limits, and for most people that means figuring out what your close friends and family are willing to invest. If you do better than that, it’s gravy on the potatoes.
Do You Have A Ringer On Your Team?
Raising money is not something most people do alone. Every step of the way I relied on the connections of family members to bring new investors into the fold. In fact, I wouldn’t have had the confidence to take on the project in the first place if my father hadn’t committed to helping me raise the money. My family couldn’t afford to finance the whole thing themselves, but they made it possible by opening doors for me that wouldn’t have been there otherwise (in addition to investing what they could).
Can You Recruit Some Help?
A few key investors also played important roles in helping raise the money. Very early on the securities attorney I hired, who has worked with start-ups for many years, agreed to invest in the brewery (this also had the happy result of making my relationship with him cash positive). I immediately incorporated this important vote of confidence into my pitch, and when other savvy investors got on board, I made sure prospective investors knew about it. Some investors even helped bring on friends and associates, and that ended representing a meaningful portion of the money.
You’ll Never Be Able to Predict It, Ever
Even after all the planning and refining, pitching was still a crapshoot for me. I’d go into meetings feeling supremely confident, only to leave deeply disappointed. I made calls to people I only distantly remembered and came away with big commitments. There’s just no way to know ahead of time how it’s going to go, or how much someone is willing to part with to turn your project into a reality. It’s baffling and confusing and frustrating and disappointing and very occasionally exciting.
It Takes Forever, or At Least It Feels Like It
It took me about 6 months to raise $1.25 million, which to me felt like an absolute eternity, but which I’m told by others is a short-to-reasonable amount of time. The process of pitching is exhausting, expensive, and repetitive to the point of numbness. It required me to become intimately familiar with projected cash flows, first year capital requirements, income statements, margin analysis, sales projections, gross margin analysis, and endless other worst and best case scenarios. All of that preparation contributed to the positive outcome, but repeating it over and over and over again wasn’t exactly the most stimulating experience of my life.