Bankers and fundraising

Part of the gruntwork at an investment group is filtering out the business plans that get sent in. Most analysts/associates have to go through this task. It gives them experience in understanding how bplans are written, what elements to look out for, and how to prioritize when hundreds of people are asking for money, and one of them might be the next big thing. It also immerses them in a bunch of ideas and forces them to make judgments on companies. The interesting ones filter through. The others, they monitor to see how things develop.
But when I get the SAME business plan through two different channels, I wonder why that happened. Sometimes, it’s because valued friends/contacts have seen the same thing and sent them my way. But usually, it’s someone who’s tried to contact me directly, and then hired a banker to try and help them raise money. The banker then contacts me, trying to insert himself as the key man between me and the company. I find this very tiring.
If he wasn’t able to source the company, and be a source of good new companies what value does he present to me?
As an entrepreneur, understand what value the banker/capital group brings to you. If they KNOW (personally, as in have lunch with/dinner with) the investor, this is valuable. If they know OF the investment group, then that’s something a little less. When the banker lists the names of funding he can get you in touch with, ask some more questions, and don’t accept broad/general answers. Ask how much money they raised for a SINGLE company, not industry, not area, also WHO they got money from, get round numbers from them, Get an understanding of who takes the banker’s word at face value. How the banker works, and what they do afterwards, and why they deserve your money. A good banker is valuable. Otherwise, they'll burn up your time.

Copyright 2010
Jean-Luc Park
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