Microconf LogoMicroconf Recap 2018

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

Brian Parks, CFA

SaaS and Crystal Palace supporter, https://t.co/D9pObfCJSY @bigfootcapital

Denver, CO
Brian Parks, CFA

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Brian's career

  • 2006-2010: mergers and acquisitions, selling companies, no real personal risk (investment banking, just like Jeff Bezos!). Used money from Private equity, corporate, debt fund and bank financing.
  • 2010-2016: early-stage companies, $5M raised, 1 done, 1 doing well, 2 we’ll see. Used money from Friends and family, angel, venture capital.
  • 2017-Now: Bigfoot Capital to capitalize early-stage software companies (4 so far). Used money from HNW (accredited investors) and family offices as my investors.

While these investors are all different in terms of how they do it, all investors are just people with a common fear: underperforming.

To overcome this primal fear, investors need comfort.

How do you give investors comfort early on in the process so they invest?

6 pitfalls to avoid 
when raising money

Pitfall #1: Casually Raising Money

You're not really raising money if you're doing it casually.

If you're not keeping in contact with your investors, they'll question your commitment.

If you're not putting your investors to work, they'll lose the inclination to help.

Pitfall #2: 
Having poor timing

Don't go out for funding too early or you'll have to prove more faster.

Don't wait too long to get funding or the walls will be closing in.

Pitfall #3: Going after the wrong audience

Bigfoot has a scoped-down list. If your list is too big, it's unfocused and your investors will question your targeting ability. Target around 30 investors.

Pitfall #4
: Having Unreal Expectations

If your investor list is too small (like 2 people), you need to broaden your scope.

If your investment window is too small, you'll lose steam.

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

Pitfall #5
: Overoptimizing

Overoptimizing feels like death by a thousand cuts.

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

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

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

Pitfall #6: 
Not thinking ahead

It’s easy to jeopardize future capital raises

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.

Recap

Raising capital is basically sales. If sales isn’t your thing, find help.

You have processes for other parts of your business, so have one here.

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

Brian is happy to chat more about any of this calendly.com/bigfoot or bparks@bigfootcap.com

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