More than 180 urban entrepreneurs were ready to pitch their business at Inner City Capital Connections’ annual conference co-sponsored by Bank of America in New York City. But only four made the cut and were given the chance to sell their business concepts before a live audience and panel of capital providers “Shark Tank” style.
The crowd favorite was HDM Systems, a power solutions firms that designs and manufactures battery-based mobile and renewable energy applications. Â The company was founded by Aileen Liu, who had a background in automotive chemistry; she saw that HDM was poised for growth by expanding her products beyond major trucking companies and the automotive industry into the military sector. Â HDM was seeking a little over $2 million to further its expansion into new markets.
While the panel of investors made a fictitious offer during the exercise, as part of the Initiative for a Competitive Inner City, ICCC does indeed connect small business owners to high-profile capital investors. In fact, HDM came to ICCC in order to find more sources for funding and after participating in the program was able to procure a loan to propel her expansion.
According to ICCC’s 2014 Impact Report, the group helped over 677 participating companies across 39 states and 189 cities. Around 74% of the businesses are minority owned and 50% have been in business 11 or more years. More than one-third, 39%, are in business services, construction, and consumers goods and services, with revenues of $5 million or more for 23% of the businesses.
After participating in ICCC, entrepreneurs raised $1.2 billion in capital: $371 million in equity from investors and $853 million in debt–bank loans.
The key to capital raising is knowing how to pitch your business to the people. Participants learned this through hands-on coaching. Tameka Moss, a partner at Next Street and head of learning and development practice, also lead session that provided feedback to four companies that pitched their businesses. Five lessons learned:
- Taylor your pitch. Pitching to investors is not the same as selling consumers on your business.
- Keep it concise and simple. Think about how much you can convey that someone will retain in a short period of time.
- Sell a dream. Investors like to hear from the company’s founders and those who are passionate about their business ideas.
- Define your scalability model. Investors like to see that you are capable of growing the business to next level, including expansion into different locations.
- What’s the ROI? Investors want to hear about return on investment. Selling the company is not an easy way out.
The bottom lines is that an investor gives you $1 her or she wants to know how soon can you turn that $1 into $100 and how much of that $100 are they going to get back.