The Summer Venture Program (SVP) was fortunate to have Les Charm, Senior Lecturer in Entrepreneur, visit Workbar Boston mid-July. A beloved faculty member, Les has taught graduate students and executives from all over the world. Aside from teaching, Les has had years of experience being on boards of companies. Through his own experiences, Les has witnessed many entrepreneurs go through the fundraising process. During this Lunch and Learn on raising money, Les shared how long the fundraising process takes, components of the pitch and investor expectations.
Les started the session by asking what is the most common word you hear as an entrepreneur when financing and scaling your company. Many of our SVP participants were surprised that the most common word is “NO.” The fundraising process takes an incredibility long time, Les shared. “You have to dedicate 100% to running your company and another 100% to raising money. Don’t let the word ‘no’ get to you personally; keep believing in yourself.” Les suggested having a partner to accompany you through the highs and lows of fundraising, whether it be a co-founder, team member, mentor, or personal friend.
Les then had the SVP participants stand up and share why an investor should invest in them. Although it was struggle for some of the entrepreneurs to articulate in a few sentences, Les advised practicing the elevator pitch of why someone should invest in you. Instead of focusing on failure and how you may have overcome it, give examples of your accomplishments. “Raising money is one-on-one. The pitch just opens the door; the follow-up Q&A closes the door.”
Before wrapping up the session, Les discussed investor expectations. Investors are typically looking for a 10x return on their investment. Les reminded the SVP participants that it will take a lot of work to build their ventures, especially with an added layer of getting the investor money back on their return. Another expectation that investors have once they are committed to the venture is control. It is common for investors to want to be part of the venture’s growth: being part of the board, being kept informed of major changes within the company, hiring decisions, etc. Once you have an outside investor involved, you loose some of your control as the founder. At the same time, if the investor is well-experienced and is involved for the venture’s best interest (and yours), there is a lot of added benefit of having an outside investor. Les shared that getting an outside investor may not be for everyone. There are other sources of funding such as banks, grants, bootstrapping, etc. that might be a better fit depending on the venture and its stage.
Although raising money can be a long process, it is something that any entrepreneur can accomplish. Having the right mindset and knowing what the expectations are can make the process easier. The more confident you are in yourself and your accomplishments, the more the investor will want to learn more about you and your venture. “At the end of the day, it is about whether the investor believes in you.”
About Les Charm
Professor Charm has been a partner in the firm of Youngman & Charm since 1972. The firm specializes in directorship functions for firms owned and operated by entrepreneurs and in assisting companies that are experiencing operating and/or financial problems. Youngman & Charm has operated in a variety of industries, channels of distribution, and has been involved in many successful financings and acquisitions and mergers.
From 1977 through 1990, Professor Charm was chairman and president of a major distributor and specialty retail chain. He has been active in other specialty marketing companies, and served as a member of the Board of Directors of the International Franchise Association. He was a director of the National Association of Corporate Directors-New England. He currently is on the board of several firms where he generally sits as the lead director.
Professor Charm has taught throughout the world on a variety of topics regarding entrepreneurship and governance. He is on the President’s Council at Babson, and is the recipient of the Appel Award for Entrepreneurship.