Your business is a vehicle of wealth creation, and that vehicle requires fuel to operate. One of my older friends (who is quite wealthy) has a famous saying that I've heard him say in numerous meetings with young entrepreneurs seeking investment:

"We are all broke at different levels."

Maybe you've felt that way as you've grown your business. Regardless of your free cash flows and profits, there's always another innovative product you want to build, a key hire you want to recruit or steal away from someone else, or market you want to expand your presence into via organic growth or acquisition.

All of these endeavors require capital and typically that capital is not adequately in your cash accounts when you are building a fast-growing company destined to climb up the Inc. 5000 list year over year.

I've learned, after 17 years of raising money for dozens of businesses and investing my own angel capital in others, that there are two critical ingredients to raising capital. The first, in particular, will hopefully be enlightening:


Sweat equity (the asset most founders and business owners bring to the value equation in larger quantity than they can bring financial capital) often feels as though it is worth more than it actually is.

This is understandable: When someone is trading all of their mental and physical energy 16-20 hours per day for several years carrying the load of the stress, responsibility, and wear and tear of running a business it is a visceral experience.

Sweat is a critical piece to the equation, and the one bringing the sweat to the capitalization table deserves a fair and equitable amount of the fully diluted equity when they successfully execute and drive value for the enterprise and its stakeholders.

The problem is that when you're raising money and you are the sweat, you cannot forget to empathize and understand what the capital (investor) side of the value equation needs. To add velocity to your ability to close on capital at more favorable terms, you must put on your investor hat (even if you've never been one) by focusing on what it would "feel" like to write a check for a business you're not going to run day-to-day.

What would you be "thinking" and evaluating if you were listening to the pitch, evaluating the opportunity, and the entrepreneur you'd potentially trust to steward your money?

What would you "say" or ask to the entrepreneur about the business model, executive team, and risk?

Lastly, what would you "do" if you were at the point of decision to write that check? What would it take to arrest all of your concerns or doubts to push you over the edge willingly and gleefully?

Empathy is the ability to understand and share the feelings of another and is the most important skill to develop to become a more effective closer and steward of capital.

The person who is managing the capital remembers all too well what it feels like to be the sweat. They want their money to work hard now, so they can leverage more than their 18 waking hours per day to compound their wealth.

They don't want to go backwards. They don't want to be sweat again.

They care about opportunity cost. They care about the rainy day scenario because they know from experience that it always rains when it isn't supposed to. They care about your tenacity, trustworthiness, talent, and commitment.

Capital is as valuable as sweat and as reliant on sweat as sweat is on it, but sweat must remember that capital gets to make the rules in most cases when you are asking for it.


The second-most important ingredient is effort. Capital raising is a sorting game, not a selling game. Sorting means kissing a lot of capital frogs until you find your prince or princess.

You should always be selling yourself, your plan, your team, and your vision. But no matter how well you sell it, good investors will have the focus and discipline to rarely go outside of their proven sweet spot.

So the best approach is to study their portfolio and style -- and realize that even if you impress them, they may not be a fit for your type of deal or structuring. If you sort well and hard with professionalism, every "no" can turn into a lead to someone who might be right with a warm intro. Sort until you find what you need.

Lastly, when you know you have "the goods" and you have a tight presentation and complete list of due diligence materials to justify the case, the only thing left to do is grind through each and every qualified and unqualified lead until you achieve a full tank of fuel.