Capital raising this is a true experience, it may seem like a plot to a blockbuster movie, but this is exactly what happened to me.
I’ll just explain a little bit about what happened in the video. I had just completed a successful transaction in Sydney Australia; I’d sold a residential property and had a handful of cash.
It wasn’t my first successful transaction. I had had a few, I once owned a property for less than six weeks that had increased in value by 18%, so I cashed in, and sold it and used the money for another venture.
I was confident and was ready to roll out thinking that “my shit doesn’t stink” I had a shit tonne of cash in my hand and my local bar was for sale.
I decided “I’m going to buy this bar!”. I spoke with the bank, they said they would loan up to 70% of the value of the business, which at the time was a stretch for them.
I had reviewed all the financials…I put together an information package and spoke to some family, friends and, so called friends of friends, who are often referred to as ‘angel investors’.
Many said they were prepared to invest, but when it came to collecting the money a few of these people didn’t answer their emails, they didn’t answer their phones and so I had a few days to settle and I had over $1,000,000 to raise.
Lesson 1 and 2
1. Don’t get cocky: just because you have been successful in one venture or two or three does not mean everything you touch turns to gold.
2. Don’t count your chickens before they’ve hatched. I thought the money was in the bag, I innocently believed because people said they would come up with the money they would.
I was starting to get worried, not panicking yet, but worried enough to start talking to lawyers. I wanted to see if I could get out of the contract. If worse came to worse and I could not raise the money I needed to settle…what were my options?
I contacted the agent brokering the deal and explained my situation we decided the best way to handle this was to talk to the vendor. We went back to the vendor and asked if he could give an extension of time for settlement. I explained I had a big investor pull out and we needed more time.
I had to secure the property, so I had already paid the deposit.
If the vendor forced settlement there was a chance I would lose the deposit – he said “We will see”.
So a few days before we were due to settle we hadn’t heard back from the vendor about the requested extension to raise the funds. We spoke to the vendors lawyers who said no extension will be given, if you don’t come up with the funds we will issue a notice to complete.
OK…so I was really worried now. I’d learnt from a young age that you should never quit, no matter what happens you’ve got to die trying…even when you don’t think you will get there you’ve just ‘gotta hang in there, keep searching for an answer.
I contacted and recontacted the people who originally said they’d put money in, I said “Look just give me an answer”. It’s OK I understand peoples circumstances change however, they should never have agreed to invest in the first first place.
I was furious! But I moved on, I said, “Do you have any other friends who may be interested in investing?”
I contacted probably another 20 people it came down to the last three…
I had 24 hours to raise over $1,000,000
I had three potential investors to meet on the last day before the funds needed to be transferred. I could not sleep. I got up at 3am, I had so much nervous energy I had to burn some off so I went for a run.
While I was running I kept reassuring myself that today I was going to win, , I was going to “rip in” my plan was I was going to be myself, no big sales pitch, just cut to the chase, talk about my previous successes and why this was going to be a good investment.
The distance from where I live in Newcastle to Sydney where my investor meetings were is about 200km.
I got to my first investor meeting and sat down with the investor, he was a family friend…his kids went to school with my kids, so an ‘angel investor’ -but a very astute one.
I went through the information memorandum, “the pitch”, he and his wife had some questions, we went through them and he said “I’m in for 200k!” then he said “No make that 250k!.
I got back in my car high fived myself once he was out of sight of course (dripping buckets of sweat) do me a favour more importantly, do yourself a favour don’t put yourself in this position – it’s not good.
I headed off to my next meeting. Knowing I had a bit over 1 million to raise in seven hours and if I didn’t sign on each new investor I was going to be sued.
Necessity is the mother of invention
I met the potential investor/s in their office, I was so anxious I went to the wrong address, I arrived and again went through the prospectus and answered any queries they had, I offered one of them a position on the board…they said yes.
My timing was perfect. These investors are smart cookies; they’d just sold another business (a company they’d publicly listed) and they were cashed up!
The contact I knew walked down to the car with me, as I was about to head off I asked “Mate, I don’t mean to be rude, but how much are you going to invest?”
He said “We’re good for 300k each.
The relief was almost indescribable; in the last two meetings I had raised 850k.
Tim is on our Board of Directors and is an absolute champion; the knowledge that he has brought to the table in regards to finance is second to none.
I had one meeting to go and 150k to raise…the heat was on.
The last investor meeting was over lunch. I had a fund manager assisting me, fund managers are people who will introduce you to high net worth individuals so they’ll bring you into a meeting, introduce you and if the investor invests, then they receive a commission. They make money through an introduction.
I hadn’t met this investor before, we sat down at the table we instantly got on, it turns out that we grew up in the same neighbourhood. We had common friends and he said Steve “I’m in for 50k”… now the fund managers at the table who set up the introduction said Steve, “We’re in for 50k each.”
I’d done it! I’d raised 1.3 million within 24 hours to save my arse.
I went to a hotel bar, where I was booked in to stay for the night…rang my wife, as you can imagine she was over the moon. I sat back, had a couple of beers with a smile on my face that nothing could remove. I woke up the next morning and was going on a flight to Melbourne. I was still jaded by the process, excited, but jaded.
I picked up my bag went through the checkout but didn’t get my boarding pass…the bag that I had was too big to carry on the plane. The Flight Attendant said to me “Where is your is boarding pass? …and your bag is too big.”
So, I had to dump half the contents of my bag into a bin in the middle of the airport.
I got the deal done. Probably not in the most Orthodox or the way you should do it, but it was invaluable and many unforgettable lessons where learned.