Money can also be a tool in the sense that it’s only as good as what you do with it.
Technology has made it easier than ever to raise money. Anybody with a compelling offering and marketing know-how can raise money using crowdfunding platforms, but these platforms don’t come with the experience required to help an investment make an impact.
Seems a bit counterintuitive, right?
There’s a reason it’s called “fund” raising – it’s about money! And most people would insist that money is money, no matter where it comes from. But money can also be a tool in the sense that it’s only as good as what you do with it.
If you find the right VCs, that money comes with priceless experience and guidance.
In other words, $1 million well deployed goes further than $1 million poorly spent.
Consider this: Technology has made it easier than ever to raise money. Anybody with a compelling offering and marketing know-how can raise money using crowdfunding platforms, but these platforms don’t come with the experience required to help an investment make an impact. This is what people are talking about when they make a distinction between “smart money” and “inexperienced money”.
While “inexperienced money” sounds dismissive, it isn’t meant to be. Inexperienced money refers to money that follows. This money (aka investors) knows that it can’t offer the vision and foresight of more experienced investors, so it follows trends and invests in companies similar to other companies that have already attracted “smart money”.
So where do you find smart money? The kind of money that helps you manage tricky talent management situations, make bold strategic decisions, overcome operational obstacles, and enter new markets? Well, that money is usually carried by entrepreneurs who’ve had exits themselves and have a hard-won understanding of startup building that comes from sitting in the trenches. Plus, they provide relevant advice rooted in reality as opposed to unrealistic timelines for returns.
“It’s important you factor in mentorship and strategic partnerships when you’re thinking about your team and business,” says Drummond. “You want mentors to align with your values and culture as much as your immediate team members. A strategic partner could make you pivot in a way that benefits their business more than it benefits the long-term vision of your company.”
For Drummond and the rest of the Broad Street Bulls team, community building, advice, and mentorship are integral components of their work.
“It’s our core pillar. That’s what we were founded on,” says Phenix. “Our biggest value comes from that mentorship and support and the guidance we can provide. We don’t necessarily say this is our standard mentorship package. We look at the companies we’re involved with, we figure out which of us or our limited partners or key colleagues could support it, which ones make the most sense, and we figure out what that company needs and what will result in the biggest value or positive potential outcome. We’re looking at this as an investment for the fund, so we need to make sure the mentorship we provide them is most valuable. We tailor it as we need to for each individual company.”
In other words, money won’t answer your calls when you’re agonizing over a strategic decision or an operational challenge. People will.
Other potential sources of “smart money” are incubators and accelerators that focus on specific industry niches. These entities not only provide money, they provide access to enterprise-level customers that can catapult a startup’s success.
Harvest Builders’ Venture Builder program offers this combination of financial support and venture building experience. It’s led by successful entrepreneurs who’ve previously raised millions of dollars in venture capital and know what it takes to build and sell a venture-backable business in the Prairies. This venture builder program leverages the same playbook that made the founders’ startup successful and employs a team of experts from across several disciplines including marketing, finance, and recruitment. This ensures startups receive the expertise and professional services they need at every startup stage, from ideation and market analysis to company formation, market launch, and growth. This environment also gives founders access to a network of angel investors and venture capitalists for financing and mentorship opportunities.