If you want Capital, you need to be READY for it. Most companies are not.
Most Financings Struggle Because the Business is not Yet Ready to Qualify for Capital. Period.
Raising investor capital can be a frustrating and humbling exercise - but it doesn’t have to be that way. 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.
Has the Business Achieved ‘Investor-Grade?’
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.’ Investors can see it from a mile away. They are seeing what the entrepreneur either cannot or does not want to see. Investors know that the business is not yet ready, and they move on.
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.
This IS a Correctable Problem
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, the entrepreneur can continue fundraising – but the most likely outcome will be their wasted time and their wasted money.
I am sorry to be the one to have to break this news. It is not done out of ill-will or pessimism. Quite the contrary. I am trying to help.
My intention is to arm entrepreneurs and business leaders with the foresight and knowledge they need to correct the situation. I am trying to save the entrepreneur and their team months and potentially years of wasted effort, tens if not hundreds of thousands of their hard-earned dollars, and immense emotional frustration and pain.
Investors have rigid requirements when evaluating a business opportunity. Particularly in this funding environment. They have very high expectations for the level of business execution progress that they seek. If the business falls short of these expectations, they are immediately on to the next opportunity. [and there are plenty to move on to]
A Better Understanding of Investors Leads to Better Results
Far too many entrepreneurs are unaware of this dynamic.
They are unaware, because they do not fully understand the mindset and goals of the investors they seek. Unfortunately, this lack of understanding of the investment community is hurting them. It is holding them back, it is holding their company back, it is hindering their company’s ability to secure growth financing, and it is getting in the way of the future success of the business.
Knowledge is power. Understanding the mindset of the investor is the most effective method to secure capital and power the business forward.
If you know of an entrepreneur or business leader that is struggling with the capital financing process - chances are that they are experiencing some form of this problem. Do them a huge favor and forward this to them. They can find solutions here - and we are happy to speak with them.
© Copyright October 2025. Marc Patterson. All Rights Reserved.
