In today’s podcast, we interview Robert Hersch of Mastodon Ventures and discuss the market for raising capital and what you should be doing to prepare. We break down a variety of ideas.

1. What are some areas you are watching for capital deployment in 2024 within the restaurant sectors?
2. How the market will respond to consumer spending pressure?
3. Will brands grow in 2024?
4. Is franchising a viable option for early-stage brand growth?
5. How do you go about selecting founders and understanding the business mission?
6. What's most important to invest in brands or assist brands to recover?
7. What are the best capital structures for startup brands?

My 8-Step Plan for Raising Capital As a startup, this can be a daunting task, but it's also an essential part of growing your business. Here are some of the best steps for taking on capital and what to watch out for:

1. Know your funding options. There are a variety of ways to raise capital for your startup, including:

• Bootstrapping involves using your money and/or reinvesting profits to fund your business.
• Friends and family: This is used for a pre-proof of concept and can be a good way to get early-stage funding from people who know and trust you.
• Angel investors: These are high-net-worth individuals who invest in early-stage startups and are more likely to invest in you vs the startup so make sure you have all your accolades and history out there and easy to find.
• Venture capitalists are professional investors investing in startups with high growth potential, looking at full return on investment. This is where your P&L performance comes into play; make sure you have a top-notch accounting firm and attorney to prep for these engagements.
• Crowdfunding: This involves raising money from many people, typically through online platforms. While somewhat new, this model is gaining more popularity, especially if you have a brand and a following - you may be able to tap into your most loyal customers, fans, and advocates.
• Grants: These are non-repayable funds typically awarded by the government or non-profit organizations. This will need a professional grant writer and an angle that provides significant benefit to society along with a vision and business plan that is easy to understand.

2. Determine how much funding you need. This will depend on your stage of development, your business model, and your burn rate (the rate at which you are spending money). This is also an area that can become very sticky with valuations of your business or idea, which you may think is more than the investor - get a third party to help you evaluate.

3. Write a business plan. This is a document that outlines your business strategy, including your target market, your competitive landscape, and your financial projections. You matter more at this stage, and the narrative is the killer app, so know what your mission is and understand the total addressable market along with the competition and a good SWAT plan is always welcome.

4. Identify potential investors. Research investors with a track record of investing in startups in your industry. This is critical and is kind of like choosing a family member - choose very wisely this can come back on you very easily.

5. Network and make connections. Attend industry events, join online forums, and connect with other entrepreneurs. But best of all referrals and high-value connections are the ones that will make a difference in getting your idea out there to those who matter most.

6. Practice your pitch. Your pitch is a short presentation that you will give to potential investors to explain your business. Focus on the mission and revenue opportunity - don’t get too tactical, and try to keep it simple.

7. Be prepared to negotiate. Investors will want to make sure that their investment is protected, so be ready to negotiate terms such as equity and board representation. Structure your deal or term sheet with a full understanding of what you are giving up as a founder - don’t write yourself out of the deal just to get it going, unless of course, you are looking for an exit.

8. Be patient. Raising capital can take time, so be patient and persistent.Here are some things to watch out for when taking on capital:

• Dilution: This is giving up ownership of your company in exchange for funding. Make sure you understand the dilution terms of any investment before you agree to it.
• Warrants: These are financial instruments that give investors the right to buy shares of your company at a specific price in the future. Be aware of the terms of any warrants before you accept them.
• Liquidation preferences: These terms dictate how investors will be paid if your company is sold or goes bankrupt. Make sure you understand the liquidation preferences of any investment before you agree to it.

Raising capital for your startup can be a complex process, but it is also essential to growing your business. Make sure to get good legal and financial representation to start the process right, you will thank me later if you do this alone!