Why is Raising Capital SO Hard??
Most Financings Struggle Because the Business is not Yet Ready to Qualify for Capital. Period. Full Stop.
Raising investor capital can be a frustrating and humbling exercise. It is not always the case, and it doesn’t have to be that way. However, if you were to survey most entrepreneurs and business leaders, the overwhelming consensus would be that the financing process was not necessarily the most life-affirming, inspiration-inducing experience. Given the chance, most would have preferred to skip it, and few are enthusiastic about ever having to do it again.
That being the case, for many companies it is not a choice. Either they secure capital, or there is no business. Given the gravity of the situation, I am going to state the most important truth about the financing process right up front.
The biggest, number one reason that companies struggle or fail to secure capital is because the company is not yet ready to receive it. Period.
The company – for a variety of reasons – has not yet progressed far enough or executed its business plan successfully enough to achieve the status of ‘investor-grade.’
This is an extremely bitter pill for most entrepreneurs to swallow. It is tough medicine. Particularly given how much effort and sacrifice have likely already gone into the endeavor. It cuts deeply to the core feelings of fear and vulnerability that many entrepreneurs secretly experience (but can’t show).
Many simply cannot accept this fact. The most common reaction to this challenging truth is to turn a blind eye and jump feet first into a capital campaign - with a flurry of activity, hope, and optimism.
If the company experiences any bumps in the road during the journey, the challenges are chalked up to an ineffective pitch deck, poor communication, or to not meeting enough investors. Those are easy ‘straw men’ to blame – and there is likely a kernel of truth in them.
However - that’s not the REAL problem. The real problem is that the company has not progressed far enough in its business plan for investors to get excited about it.
The crucial implication to understand is that nothing good is going to happen on the fundraising trail until this problem is faced head-on and adequately addressed. Sure, you can continue fundraising – but the most likely outcome will be your wasted time and your wasted money.
I am sorry to be the one to have to break this news to you. It is not done out of ill-will or pessimism. Quite the contrary. I am trying to help you. My intention is to arm you with the foresight and knowledge you need to correct the situation. I am trying to save you and your team months and potentially years of your life, tens if not hundreds of thousands of your hard-earned dollars, and immense emotional frustration and pain.
© Copyright October 2025. Marc Patterson. All Rights Reserved.