Duration – 2:18
Gary Vaynerchuk | CEO of Vaynermedia: The biggest mistake that people make when they raise money is, that they didn’t need it.
Mellody Hobson | President of Ariel Investments: The number one mistake, I think people make, when they’re raising money for their company or their funds, is that they underestimate how much money they need. Whatever the number is that you think you need, I tell people: double it. Because we’re too conservative when we’re planning, and we’re too optimistic when we’re thinking about the upside.
Gary: We’re in this place right now, where everybody thinks that they need money, that that’s the validation. We celebrate– We celebrate somebody who raises money. I laugh at that. That’s somebody giving up a piece of their business. And the other thing that they make a mistake of is, they see that big number, and they start burning. They don’t actually have discipline of building a business that makes money, because they have the backdrop of the dollars behind them. And so they’re burning $30,000 a month, and they claim, like, I got another round, and I got another round, and everybody’s celebrating these rounds. And they’re just not building actual businesses. They’re building financial arbitrage machines.
Mellody: The other big mistake I think people make, is they go to individuals, or companies, and they ask them for numbers that are too large, when it’s a first-time endeavor. I would, if I were you, think retail, as opposed to wholesale. Going out and raising money in small bites. That’s what John Rogers did when he started my firm, Ariel Investment. He went to his local doctor, and dentist, and lawyer, and asked them if they would put $20,000 into something he called the Ariel Fund. And ultimately, that’s how he raised $500,000. He didn’t go to each person and ask them for half a million, or a million dollars.
Bob Nardelli | Former Chairman and CEO of Chrysler: You know, raising money is a very personal and sensitive thing. When you raise money, I think, and you’re going out there and putting your name on the line, your credibility. I think you really have to be absolutely, dead-nut sure, that your program, your startup, whatever it is, is going to be successful.
Scott Galloway | NYU Professor of Marketing: I think the biggest mistake is thinking that you need to have expenses to show progress. The key to raising money is to have a product, or to have revenues. People want to invest in a company that’s already up and running.