I’m an avid reader of Entrepreneur Magazine. I’m also someone who’s been both an entrepreneur in pursuit of capital and an advisor to companies in their search for capital. I know firsthand how complicated it can be deciding to hire an advisor, finding the right one, and then managing the relationship. So I read with great anticipation David Worrell’s recent piece entitled "Guide and Seek: If you’re heading out on the fundraising trail, consider taking a guide along to keep your company on the right path."
I’m sorry to report that after reading the first paragraph it was all I could do not to throw the magazine across the room.
Mr. Worrell gets it wrong from the outset with an incorrect and misleading opening: "Fundraising is not something most business owners do often — maybe only once in a lifetime."
This is just not true. Companies are always in the market for money. In fact, the most successful companies employ a variety of funding methods on the route to success and beyond — whether it’s garnering favorable credit terms from a vendor, securing a line of credit, raising equity from investors, using internally generated cash flow, or obtaining an equipment lease.
These and many others are all part of a continuum in the growth of your company. It’s absolutely vital for you to know what place a particular fundraising has in your company’s continuum. It’s only in this way that you can take care of your needs today without foreclosing options in the future.
If you choose to hire an outside advisor you have to find one has the right combination of knowledge and experience to deal with your current situation from this perspective.
If you don’t understand this, when you seek outside capital you’ll be doing it a vacuum, and you’ll be in real danger of hiring the wrong kind of advisor and raising the wrong kind of funding the very thing you were hiring an advisor to avoid.