When and How to Acquire and Invest Capital into Your SaaS Business

Brian Parks, CFA

Along with my wife and our cat, I support SaaS Founders and Crystal Palace Players. I support my wife and our cat, too. http://bigfootcap.com

Denver, CO

You'll learn how to make investors comfortable giving you money.

Brian Parks

Since 2004, Parks has spent his career in and around other people's money:

• 2006-2010: mergers and acquisitions selling companies. Parks used private equity money, corporate money, debt fund and bank financing.
• 2010-2016: raised $5M for 4 early-stage companies with money from friends and family, angel investors, and venture capital.
• 2017-Now: started Bigfoot Capital to capitalize early-stage software companies (4 so far) with money from HNW (accredited investors) and family offices.

While these investors are all different in terms of how they invest, all investors have a common fear: underperforming.

To overcome this primal fear, investors need comfort from knowing that you're making good decisions with their money.

You can show early on in the investment process that you'd be good at making decisions with an investor's money by conducting yourself intelligently when raising money. This talk is about how to avoid common pitfalls of raising money.

Check out Bigfoot Capital's Growth Edition Giveaways and reach Brian Parks at calendly.com/bigfoot or bparks@bigfootcap.com.

6 Pitfalls to Avoid When Raising Money

Raising capital is basically sales. If sales isn't your thing, find outside help!

You have processes for other parts of your business, so build one for raising money.

Investors are skeptical. Use the process to reduce their doubt.

Pitfall #1: Casually Raising Money

If you reach out to an investor asking for money, then don't follow up for another 90 days, the investor will question your commitment.

If you ask for help raising money from someone like Bigfoot Capital, put them to work! Ask for investor introductions, financial model reviews, and information about the investment process.

Pitfall #2:
 Poor timing

Raising money too early (before you've launched) is bad because it's much harder to iterate and learn. Instead, have conversations and build relationships with investors.

Don't wait too long to get funding or you'll be in a distressed position and probably won't be happy with the deals available.

Pitfall #3: Going after the wrong audience

If your potential investor list is too big, your investors will question your targeting ability.

Bank financing only works if you're venture backed, and usually only works for smaller loans. Other investors might question your qualification ability.

Pitfall #4
: Having Unreal Expectations

If your investor list is too small (like 2 people), try broadening it to 30 or 50.

If your investment time window is too small, you'll lose steam ("deal fatigue").

If you overestimate your value, you'll shrink your market and turn groups off.

Pitfall #5
: Overoptimizing

If you're constantly renegotiating, good faith goes down the drain.

If you're overemphasizing edge cases, your judgment will be called into question.

If you can't get comfortable with a deal, your investors will start doubting their investment late in the game.

Pitfall #6:
 Not thinking ahead

If you only do what's comfortable, you'll get lazy and pay less attention. If you lock yourself by taking financing, you reduce optionality of taking future capital.