Can I hire someone to raise capital for my company?
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Answers below are by Josh Hannah, Piyush Patel, Erik Caso and Paulo Knabben.
Answered Feb 25, 2015
Two successful exits. and Marc Bodnick, Helped raise Quora’s Series B & C rounds
There are people (brokers, bankers) who will help you raise capital for a company. They typically take a percentage of the raise as payment (1-5%), so unless you are raising at least $5-10M, it will be hard to get anyone to do the work for you. And to get anyone talented, you’d need to be raising several times that. Usually, using a paid advisor to raise capital is reserved for a successful business with significant revenue and profits. It is considered bad form for a new venture in Silicon Valley to use a banker to raise capital for the company, and very very few deals get funded this way, and they had better have a good reason for doing so. In a startup, a huge percentage of the “product” that investors are buying is the founder. If the founder doesn’t have the skills to raise the capital himself, in most cases VCs and other investors don’t want to back them.
Answered Mar 3, 2015
Several possibilities. I just participated in supporting a vendor that strongly believe in what they are doing to raise money and also to help operationalize the use of that money to grow. In this case, the Investment Bank and myself worked at our own cost and took a fee of the raised capital as our return for invested time.
I’ve seen people take fees regardless of outcome, not a fan of that model. josh’s comments around what the investor is looking for ‘fund’ is relevant.
The team (and their history together)
The product ( and competition)
The business (lots of things here from different angles)
but most of all, their own confidence or desire to be ‘in’ the deal.
Many that we talked with didn’t get interested at first if they didn’t understand the space or ‘missed out’ on a deal before. Those waited for bids to start then jumped in. Others that knew the space, some had conflicts as they have invested in a competitor or ancillary tech and didn’t’ want to be over committed in one focus area. Lots of things are possible but I will tell you if you haven’t been through it, you won’t find it easy, unlikely to succeed with out help. If you have been through it, still not easy but manageable with out help.
Answered Jun 6th, 2017
It depends on lots of things (e.g. staging, industry, etc.), but if you are a modern, early-stage tech company, the answer is likely no. Since you are asking this question, it’s likely you are an early stage company (if you weren’t, you’d probably know the answer to this question). Early stage technology companies can’t raise typical VC using brokers. Why? Well, it’s pretty much your job to be able to raise money. If you can’t, it is unlikely you can be an effective CEO. Raising money, hiring key staff, creating inspiration and developing critical short, mid-term and long-term strategy is the job of the CEO. VC know this, so if some broker/IB tries pitching you they’re going to scratch their head and wonder why you’re not in front of them doing it. It might mean you aren’t able to (which is bad); or that you don’t want to (which is bad); or possibly other things (which are probably bad).
There are countless people who will tell you they can raise capital for you. And in many industries, later stage companies can absolutely use a good IB to do this. However, if you’re raising a seed or A round from your typical venture firm, this would be very very unusual. In addition to being unusual, in my experience, having seen many try it, it fails 100% of the time. Perhaps other people have seen otherwise, but not me.
If you think you can’t do it, believe me – you can. It’s your company and no one cares about it more; you’ll figure it out. If you know you can’t or don’t want to, perhaps find a co-founder or new CEO and find the role you prefer. Not everyone wants to be CEO or likes it – it’s not always the best job out there (but it can be under the right circumstances). Good luck.
Answered Feb 25, 2015
If you’re in need of capital it is time to save money, avoid unnecessary expenses and try your best to find better ways to raise income.
I’d suggest you to find someone who could help you and make a deal with him/her, so you’ll give a share of the income to that person when the money comes.
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