Should I Pay to Play?
So you have decided to start a business and need to get started. The first step, beyond coming up with the idea, is writing your business plan. Your business plan is the blueprint of how you will be running your business. Although you can hire someone to do this for you, it is not ideal. You should know your business plan front and backwards and be able to answer the most miniscule question(s), without batting an eye. Why is knowing your business plan crucial? You want to get financed don’t you? Here is the tricky part, when it comes to financial backers, where and whom do I start with? Should I pay someone to tell me whether I will get funded or not? This came to me while perusing Twitter. I follow those who inspire, motivate and most importantly those giving sound business advice. So it was during my Twitter Talk that I saw a few mentors speaking on a great new program entitled the Venture Capital Access Program which seeks minority businesses who focus on integrating technology in their business model. I thought this would be a great program to become involved with. I previously asked the mentor about VC and if I should spend money on seeking one out and he replied (way back in 2/25/11) ”legit investors/venture capitalists don’t want fees. They are only interested in the moneymaking potential of your biz.” Which of course I agreed with, so imagine my astonishment when a few days ago, this same mentor is promoting the VCAP who charge a $500 fee just to submit your idea with NO guarantee of funding. This sounds like the old bait and switch. Charge me to submit my idea then it ends up someone elses? Other twitter followers chimed in that it is too hard to seek out VC’s so paying for access isn’t such a bad idea. The mentor says you must have skin in the game and investors want you to invest in yourself first before they will. Here are my tips on finding legit VC’s:
- research other companies who operate a business similar to yours
- set Google alerts on these companies
- READ THE ARTICLES GOOGLE SENDS YOU!
The articles contain ALL THE INFORMATION YOU NEED! They will tell you which company backed them or provided financing and they will also give a few hints as to why they invested in them. You can also contact the company and find if there are ways to work together. As a regular reader of Black Enterprise and every issue begins with a word from the Chairman Earl Graves Sr. A few issues ago he spoke on the need for minority companies to work together. He further explained in the early days of both BE and Ebony, he and John Johnson would sit on advertising sales calls together so companies would place advertising in both magazines, not one over the other. They found no reason to quarrel over advertising revenue when they could close deals together.
Raising money is easier now thanks to websites like Indiegogo and Kickstarter which allow you to share your idea/passion with others and let them fund you. Untraditional yes, but if it gets you results, why not try it, ask Amanda Palmer.
Since VC’s are looking for you to invest in yourself first, do so. Start your business off slow and build it up, eventually the VC will come to YOU. Taking into consideration paying the fee does NOT guarantee funding, use that money towards yourself. Invest in a good suit/shoes so you look the part when its time to give your pitch.