There are literally billions of dollars ready to be invested in Hemp.
I’ve seen it. I’ve spoken to the people responsible for it. And I’ve become a co-founder in a business dedicated to connecting those who have the capital with those who need the cash.
Sadly, I’ve also seen several Hemp entrepreneurs walk away from solid funding options, because they had a very narrow view of how an investor thinks, what an investor wants, and what it really takes to get the funding you need.
So – in an effort to help companies who are at least 6 months old (because funding a company younger than 6 months is darn near impossible) here’s a bit of Hemp Wisdom about creative ways to fund your business.
Walk Before You Run
So, you need 10 million dollars to fund your ultimate hemp dream. And while you’re convinced it’s an amazing idea, you can’t seem to find anyone willing to jump on board.
Here’s a secret. Investors are much more willing to work in manageable chunks, than eat the whole elephant at one time. Therefore, if you can boil down your vision into a $500,000 investment to get started, then a $2.5 million investment a year later, then show them how your $10 million dollar dream will radically alter the hemp space forever – your funders might be a bit more receptive to your initial pitch.
Too many entrepreneurs find a funding source, then mess it up because they get greedy and ask for too much. Make sure you prove that you know how to walk before you run, and you’ll be surprised by how many more people are willing to entertain your offer.
2. Sharks are not your Friends
If I had a nickel for everyone who believed investment funding happens just like it does on television…
In most people’s minds, you get in front of 5 investors, you pitch your idea, they all fight for the right to fund you, and you get a celebrity partner who’s going to make you a gazillionaire.
In truth, it’s not even close.
For most small business owners in the Hemp space, I would NEVER recommend an equity deal for funding. Why? Because you are saddling your company with massive amounts of over-loaded baggage. Baggage that you’re going to be forced to carry around FOR THE LIFE of your company. And who’s going to do all the work? Not your partner! That’s right. It’s YOU. You’re going to do all the work for your business while your non-celebrity, mostly non-interesting equity partner, sits back and collects your checks.
A more creative option is to consider a loan partnership where you get to keep 100% of your company and pay back the investor over time. Plus, once you establish a credit history with a Hemp-specific lending company, they’re much more likely to turn around and loan you more money in the future (and in some cases, a more favorable rate). A win-win for everyone.
3. Get Them to Commit Already
Here’s a pickle. What do you do when you’re about to land a huge order, but based on your current inventory you can’t fill the new order because you don’t have enough capacity to create everything the new huge order entails?
Well, in this case, timing is everything. And if you can get an official signed contract for the huge order, with the understanding that you’ll be able to deliver a certain amount of product by a certain date, that’s the kind of thing investors salivate over.
I’m afraid a Letter of Intent isn’t enough. It’s the contract that makes an investor ready to pull the trigger. Therefore, why not negotiate with the person offering you the “huge order” – and find out what it would take to get a contract between the two of you. Contractual commitments can unlock the doors to funding faster than you can say, “I do.”
4. Skin in the Game
For many investors, making money is like a game. And the more money an investor has, the more games they can play, and ultimately, the more chances they have to win.
That’s why, if you’re not willing to put your own money where your mouth is, you’re going to have a tough time closing a deal. When you ask the investor to take all the risk, they’re likely to pass. Instead, be willing to show you’re serious about your company by offering something of significance as collateral. Or, have the guts to ask someone who’s worth more than you to serve as a guarantor. Doing so, means you have a deep amount of faith in yourself and it speaks volumes to an investor. And in most cases, an investor doesn’t really want your collateral – They just want to know you’re truly dedicated to paying back what you owe them, and ultimately, winning the game.
5. Check Yourself
There’s an old saying of, “If you’re the smartest person in the room, it’s time to find a new room.”
Trouble is, a lot of people like being the smartest in the room.
In order to get funded, you have to be connected to the right people and be willing to listen to what they already know. If you only knew the crazy and creative ways I’ve seen deals get done, you’d be shocked! But that kind of favor is reserved for people who are humble enough to listen and learn from those who are willing to offer their expertise. And if you’re not one of those people, it’s going to be awfully hard to get you funded.
Yes, there might be a cost to acquiring these connections – but if you walk away with the investment you need in order to advance your business, isn’t it worth it? Again, investing in your own business is a sure sign that others can count on you to deliver. Plus, humility never goes out of style.
And there you have it – Five creative ways to get funded in the Hemp Industry!
If one of these creative options above stands out to you and you’d like more information on how to get funded, reach out to us here. And, if you’re an investor looking for additional Hemp companies to fund, you’re welcome to contact us as well.
Again – There are BILLIONS of dollars sitting on the sidelines, just waiting to be invested in Hemp. The question is, are you ready to consider one of the alternative methods listed above in order to give your potential funder the opportunity to say, YES?
The Hemp Business Advisors
Co-Founder and Corporate Liaison