Now that you have prepared an executive summary, a business plan and detailed financial projections, determined your optimal financial structure, created appropriate legal entities, prepared a PPM, an investor presentation, and a due diligence binder, and made appropriate filings in each state in which you will contact investors, you are finally ready to raise funds.

Beyond the investors that to whom you already planned to market, identifying additional potential investors can be accomplished through internet sleuthing.  Search for venture capital funds that specialize in your industry group, in-house funds at major companies in your industry, trade associations, local angel-investment groups, and so on.  Be creative.

Every time you find a new potential investor, common practice is to send them a nice email with your executive summary attached.   Record all of these contacts in a spreadsheet.  Follow up on the executive summary by telephone a few days later.  You will get turned down most of the time, but some investors will ask that you send your business plan/financial model and/or schedule a meeting.  At these meetings, you'll be presenting as described in Preparing to Raise Funds.

Basically, you are going to spend at least a few months pounding the pavement in this manner, researching, emailing, phoning, presenting.  There's no silver bullet, regardless of the quality of your deal.  You can hire a finder in some form (investment bank, consultant, financial adviser) that may be able to get you in front of people, but you will still need to present well and close the deal.  During this process, you will be told by many investors that they are “very interested” or even that they are “going to invest.  You'll probably find that the percentage of even those investors who state that they are “definitely” going to invest who ultimately do write a check is surprisingly low.

In addition, you may find that some investors are indeed ready to write a check but at the last minute demand a dramatic reduction in your valuation or unique terms.  Some investors will even promise at an early stage to fund your entire deal, thereby dissuading you from contacting others, and then at the last minute make such demands.  A variation on this is keeping you tied up in negotiations until you run out of cash, leaving you the choice of shutting the business or accepting their deal.

The antidote to these ploys is to keep on marketing until you are funded, regardless of the promises you have received and even if you are in negotiations with a prominent venture capital fund.  Keep on marketing until the funds have cleared.  It's arduous.  It's the last thing you want to be doing.  But it is the only thing that will keep such investors honest.

When your investors are finally ready, they need to fill out the forms that you will have provided in the PPM.  Never fill in any portion of these forms on their behalf.   When you receive a check or transfer, obviously never even temporarily comingle those funds in any non-company accounts.  They should instead go directly into a company account.