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Why Traditional Investment Bankers Don't Work Well with Startups

  • December 30, 2019 11:34 AM
    Message # 8426568

    At one point or another, most startups will find themselves in the uncomfortable position of needing to ask for a serious amount of money — beyond what they’ve been able to raise from friends and family — in order to grow their business. The snag is, most entrepreneurs don’t fully understand how to find, pitch, and secure funds from investors themselves.

    Enter investment bankers, who act as a connecting link between founders and investors to help startups raise capital. Unlike venture capital or private equity firms, most do not directly invest their own money but rather, charge a success-based fee for fundraising. 

    Good investment bankers have established credible relationships with wide bands of investors, nurtured over many years, and possess a keen understanding of what will resonate with an investor. Why is this important? Because often times, founders have great ideas but get in their own way, and don’t know how to articulate the company’s direction, or how to pitch an investor, or even know what an investor is looking for. Often, founders get so enraptured with their own ideas, they forget that an investor’s main goal is to make money. Key metrics on margins, paths to profitability, customer adoption rates, and so many of the financial aspects of the deal are often buried deep into presentations or posed as afterthoughts. The result is that the whole message gets lost, as does the potential to raise money.  Continue reading........

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