Looking for an adviser to help raise capital

Stay away from money finders, or anyone who wants a fee in advance of billable hours worked. Also, beware anyone who wants a cut of the raise, some folks ask for as much as 5% for making introductions.

I agree with James. A fee for service arrangement is not ideal.

First, you might ask yourselves, why would selling part of our company be the most effective way to raise outside capital? It's the most expensive method and you will loose some control over how the company is run and it's strategy.

Raising equity capital is a job that requires resources and time. It is marketing for an investor and there are no short cuts to getting someone to write a check. The only intermediaries who might provide quality introductions would be attorneys who are connected to venture and angel groups. But you would still need to be prepared to make the pitch.

I would suggest start interacting with your local tech council and start up networking opportunities in your area to learn what goes into a successful capital raise. There is definitely a learning curve and any potential investor will require that you are well aware of the steps involved with the process.

But again, investigate your options. What do you need the money for and what would you be willing to give up for it?

In working with clients in Silicon Valley for the past 25 years my experience in raising capital is if the management team is strong, the idea is unique and defensible and the market is big enough for your solution than you will be able to raise money. In terms of access to potential funders (venture capitalists, private equity specialists, angels, etc.) it is wise to first use your personal network or the network of your management team. They most likely would have raised money in the past or had access to various funding avenues. If this proves fruitless utilize the network of your clients, consultants working with you or suppliers who may be able to make introductions. Either way the key is to get a warm introduction. It will speed up the process immensely. The role of boutique capital advisors has the potential to speed up the process and provide warm introductions but it may not be worth the additional equity that you will be asked to give up (2%-5% fees). These fees on top of the potential funding source can be prohibitive to your company.

Although these groups have been proliferating over the past few years due to the major inflow of money into the valley, I still don’t see a lot of them come to fruition. The main reason is that entrepreneurs have gotten better at networking, building a fundraising strategy and clearly articulating their value proposition to potential investors. Plan on spending at least 5x more time and brainpower on the fundraising aspect of your business and view every connection as a potential warm entry to an investor.

Chris