Latest / The SmallBizChat with Melinda Emerson / How to Fund Your Business From Investors with Lisha Bell

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How to Fund Your Business From Investors with Lisha Bell · The SmallBizChat with Melinda Emerson

• 0:00
  3, 2, 1, 0, ignition.
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  Lift off.
• 0:09
  Ending small business failure.
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  Welcome to the small biz chat podcast with the number 1 small business expert, Melinda
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  Emerson.
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  Melinda's goal is to end small business failure, and she'll give you the information
• 0:23
  you need succeed and live the life you dream of.
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  Now here's your host, the small Biz chat lady herself, Melinda Emerson.
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  Have you subscribed to the small bizchett podcast?
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  Well, it's time every Wednesday we offer listeners bite sized actionable tips to start
• 0:43
  and grow a successful small business.
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  And just 20 minutes or so a week you can get a ton of insight and resources to propel your
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  business forward.
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  Be sure to subscribe to the small beachhead podcast today.
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  Hi, everybody.
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  I'm Melinda Emerson, the small biz lady.
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  America's number one small business expert And I'm so excited to welcome you to a special
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  edition of small fish chat live.
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  So we have an amazing show in store for you.
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  Today.
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  1st and foremost, we're gonna be talking about what you need to know if you want to attract
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  investors into your small business.
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  Let me introduce Lishabelle.
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  She is the co founder of BLXBC.
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  It's an angel syndicate of Mom's funding Black and Brown founder.
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  She's also the host of the sisters with ventures podcast which aims to tell the stories
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  of women in venture capital.
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  Bell is also the prior deal flow lead for pipeline angels and angel group of impact
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  investors focused on women and fems to build an a $7,000,000 portfolio.
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  Alicia also serves as a board chair for Blackgirl Ventures And in her day job, she is
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  the economic opportunity manager at PayPal for more information on her head over to
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  lishebelle.com.
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  Alicia, welcome to the small business chat podcast.
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  Thanks for having me.
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  Happy to be here.
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  Oh my gosh.
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  You have so many jobs, girl.
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  I you need some rest, I think.
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  But listen.
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  So so let's just jump into it.
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  Tell me about your your background and how your day job kinda led you to this angel investor
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  world that you've become such a leader in.
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  Yeah.
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  So I'm a tech girl through and through.
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  I moved to Silicon Valley, right after undergrad.
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  Patient to be into that combat bus movement.
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  And I spent most of my career in fintech working on paintings like Apple Pay, Google
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  Pay, you know, bill pay, you know, we didn't have online banking just, like, 25 years ago.
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  So think about that.
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  And so I realized working in this valley that just being called Victor Capital, and there's
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  some companies that get funded and some that don't.
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  And so I realized that, from my money in tech, I could be a credit investor and made enough
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  money to buy my own chance to be qualified.
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  So I started getting into this venture capital world because I wanted those people who looked
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  like me and represent the ideas
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  that I really cared about, and
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  I didn't really see that happening.
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  I love it.
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  I love it.
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  So tell us about, your your syndicate that you've created.
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  VLX VC.
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  Tell me about that.
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  Yeah.
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  And so, essentially, we represent women of color who are building businesses.
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  And more importantly, our cap table is women color, people of color who'd want to write
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  checks in that community.
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  And so the problem with Venture Capital Journal, it's ran by 99 Saint Lightning was
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  well.
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  And so it's really hard to get checks.
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  If you are not in that contingent or didn't go to Ivy school, there's a lot of gate keeping
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  that happens in the industry 3.
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  And so what we aim to do is to really transform who writes his checks and who gets capital
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  individual capital.
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  So that's what we focus on.
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  Now tell me how your sisters with venture podcast came about.
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  I know about it because I remember when you first started it.
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  But tell the world about how you started the other SWB.
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  Right?
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  So
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  tell me.
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  And you guys should check out on the women's episode, but she was so where she's to come on
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  the show.
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  But, essentially, there's all these phenomenal women that are building enterprises that no one
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  talks about and people don't know about.
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  When you think of venture capital, you probably know Elon Musk.
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  You know, there's probably a group, PayPal mafia.
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  Right?
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  There's probably a group of people who are very notorious in this industry.
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  And I'm like, there are regular everyday people writing checks and nobody's talking to, that
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  nobody knows about.
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  And so I really wanted to amplify those stories and really provide information for us to get
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  more people to write checks and virtual capital point 0 5 percent of women, right, Texas, and
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  BC.
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  And so we have an opportunity to grow that number and provide more capital for more of
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  business ideas we care about.
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  We don't need any more dating apps.
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  You know?
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  Like, we think that really gonna change the world.
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  Right.
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  We need to solve some real problems.
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  Right?
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  Problems.
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  Yeah.
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  So talk to me about what does it take to be an accredited investor?
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  Cause I think There's probably a lot more people who are qualified to be an accredited
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  investor than think they are.
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  Yeah.
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  A lot of people don't know.
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  You don't get, like, an alert from the IRS Hey.
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  Guess what?
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  We made enough money this year.
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  So the SEC had really strict guidelines around a credit investor.
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  You have to have a 1,000,000 in net worth or have earned income of 200,000 if you're single
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  or 300,000 if you're coupled.
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  And so this benchmark is less than 2% for America.
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  In terms of wealth.
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  So it's a pretty high bar, but many of you may have many jobs and many ways to do 5 through
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  your real estate portfolio and other assets,
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  and you should just take
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  a look and see if you are qualified because it's a great opportunity to add to your
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  portfolio.
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  I love it.
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  I love it.
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  So, yeah, I think there's a lot of people that qualify for that.
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  I mean, there's a lot of let me say there's a lot of business on the tech to qualify today.
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  Absolutely.
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  I think w two folks, it might be a little tougher, but but even a lot of them, you've
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  been working at a company a long time.
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  You've been taking the stock off.
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  Just you could do it too.
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  So so let's talk about what does it take?
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  What what are you typically looking for when you're evaluating a potential When you're
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  evaluating a potential business that you're considering, investing in, what are you, you
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  know, What do you what what tick was your fancy?
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  What are you looking for?
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  Yeah.
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  Emerson, it's all about the team.
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  Like, Lucy is a human business.
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  Like, Ken, is this the founder that can execute the idea?
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  It can be great.
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  People come up with great ideas every day.
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  Right?
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  It's like, Kate's actually execute, are you the person that most qualified to do that?
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  And do you care enough about whatever you're building to stay in it?
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  Because as everybody knows entrepreneurship is extremely difficult of a path to take.
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  Right?
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  The other thing is is this an idea that has an addressable market.
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  I, e, can we make money?
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  Can we profit?
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  Like, we're not philanthropists.
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  We want our money back with a return flight to next.
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  And so we wanna make sure that you are attracting a market that is a it's a real
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  problem that we need to solve.
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  And there's some mechanics behind it that will make it sticky.
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  And I think the third thing is around with the impact investors, like, is this gonna change
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  the world in meaningful way?
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  Is there gonna be a significant outcome that's what's gonna be impactful in people's everyday
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  lives.
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  So I focus on financial inclusion.
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  You know, is this something that's gonna expand or buy for everybody?
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  So That's my lens because I really care about the impact that we're making.
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  I love it.
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  I love it.
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  So alright.
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  So there's a difference between angel investors and venture capitalists.
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  Right?
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  Can you break that down for us?
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  Yeah.
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  It's like my night dollars is my day job.
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  Right?
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  So Essentially, HLS is write small checks, and small can be between $50,025,000 checks.
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  And they're really what we call, like, friends and family first and money.
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  So when you're early stage company, call or pre You're raising, you know, under a $1,000,000,
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  typically.
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  But once you become, you know, revenue generating, you're headed to series a, B, C, D,
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  etcetera, you're gonna need a lot more money, and that's what we call institutional capital.
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  So that's simply where venture capital steps in.
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  So you'll get a firm, like, a a pay called ventures who's writing couple of $1,000,000
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  checks.
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  So it's really the scale and level.
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  And at that point, angels are kicked out.
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  So angels only come in early.
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  And after that, you gotta upgrade to the big money to take on the rounds and keep putting
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  those companies.
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  Okay.
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  So but is the is the is the deal harsher, though?
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  Like, is it, like, it it it, like, I I've always thought about angel investors as being,
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  like, sort of, like, the kindler gentler way to get investment and venture capital being, like,
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  a Pampo relationship.
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  You know what I mean?
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  So I'm So I'm trying to understand, you know, in your Melinda, how you view it differently.
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  Your angels are typically your friends.
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  They're people who actually really care about your business and care about you the most, and
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  they take the most risk Right?
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  And so Richard Catalyst coming out of this company's been doing good.
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  So it's like, oh, it's making money.
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  Great.
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  It's doing all the things.
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  Because you could have been later.
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  And so the angels get rewarded for being angels and caring.
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  But once you'd handed over to Victor, that's when CEOs get fired, fired.
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  You know, think about seed jobs and apple.
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  Like, that's what you see.
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  Like, you get kicked out of your own companies.
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  Your co founders get hired, like, a lot of things didn't happen once you handed over
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  because you essentially are losing equities, taking ownership of your company, the more you
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  fundraise.
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  And so you do have to be critical of your founder about who you're allowing on your cap
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  table because you're giving that person more control.
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  And it doesn't mean that they don't love you, but they're focused on investing into the
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  company, which may or may not include you.
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  Listen.
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  I I'm glad you explained it like that, but I I saw it.
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  I had a friend get removed from their company.
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  So I know exactly what you're talking about Now what are the common mistakes that entrepreneurs
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  make when they seek investment funding?
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  Yeah.
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  I think there's a lot of confusion on what type of funding is Ripe or entrepreneur, right,
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  because there's small business loans.
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  There's VC.
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  There's so much.
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  And I think you got to know what kind of business you're building and what is the best
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  capital path.
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  And, personally, if you wanna give up ownership, if you like, this time be a great
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  small business for me and my family for decades to come, don't give your money.
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  Don't give out equity of your company.
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  And you're making money, you're great.
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  Do that.
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  Like, that's good.
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  That works too.
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  I think some people are lured in the venture capital.
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  Because we call it free money.
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  It's like money, you don't have to pay it back when you fail.
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  And if you take a business bank loan, you have to pay that money back regardless of if you
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  that business makes it or not.
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  But with that, you're giving up a lot.
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  And so I think entrepreneurs have to know what type of company they are building you know,
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  they're trying to scale a company, you know, and year via big tech ecosystem, Twitter, or
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  something.
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  Like, that's gonna take a lot of money.
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  Like, you can't do that by yourself.
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  Right?
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  Like, this kinda take a whole team, but, like, I got a great cleaner shop that's a mom and pop
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  business that's very profitable.
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  We got big equipment we took out a loan and paid it back.
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  Like, like, to do that, you know, so I think you have to know really where you fit in.
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  Okay.
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  What about what people sometimes I feel like people value their business too low, and then I
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  think there's some people out here that value their business too high.
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  So how often do you see that kind of stuff?
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  Yeah.
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  I mean, okay.
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  So the white guy's always overvalued there.
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  Right?
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  They're very prideful about what they do.
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  And then you see marginalized groups and women devalue their business.
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  Like, that's what we see a lot And so investors are always skeptical of any evaluation, you
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  know, and don't take it personal, but we're always trying to figure out is it really what
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  you think it is?
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  Because founders are sometimes they lose no, or sometimes they believe that they're investing
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  and you're like, well, many investors have seen the same periods, like, 35 times.
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  You're just a different flavor of the same pits.
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  Right?
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  And so, you know, visitors are a little more critical because they have more experience.
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  In in in that.
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  So I I tell founders, like, you believe what you believe would just be open that someone
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  else believe might be a little different, and there may be adjustments.
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  And so you see the lender markets where there's these evaluations, the evaluations, based on,
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  you know, how the money is flowing.
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  Sometimes a founders market, sometimes an investors market, Melinda like real estate, and
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  you gotta get in where you get in.
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  Thank you for that.
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  Alright.
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  So last question before we go to the break, how do you find an angel investor?
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  I mean, is it just like let me call my peeps that I went to college with, you know, like,
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  like, how do you how do you kind of survey who where to find angel investors?
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  They're probably hiding under rock, not wanting to be found.
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  I mean, I think if I you know, there's people who flaunt their well, but mostly people
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  originally don't flaunt their well.
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  So you kinda have to know where the money is at.
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  And so I, you know, think about groups that attract a fluid people, you know, I joke as to,
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  like, the country clubs, and some people have discretionary spin, the philanthropic people
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  who give a lot of money to institutions.
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  Right?
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  Like, they all have friends.
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  Right?
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  And you probably do have some friends and family who are accredited.
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  Just don't know it.
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  Right?
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  Like, your business is doing great.
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  I thought you guys had a nice home.
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  I mean, don't say that.
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  But, you know, if they have a $1,000,000 house, then you know that they're a credit investor.
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  I mean, that's one easy way to qualify in your Melinda.
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  Not out loud.
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  You're right.
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  And there's also, you know, crop funding, which you don't have to be a credit to do.
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  So I tell people, like, you know, anybody can give a $100, you know, like, then you have to
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  start there before you get to, like, venture cap, a goal best right, who writing modern
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  texts about HR ideas.
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  So I tell people, like, play where you can play, but, you know, you definitely will have
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  to, like, you know, I love LinkedIn.
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  It's my favorite jam.
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  Like, work LinkedIn does where they're part of the dresses are.
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  They're on LinkedIn.
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  Like, you see what they do?
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  And that'll tell you.
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  But, yeah, it's definitely a relationship kind of business.
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  And so if you're introvert, you probably need to have a co founder as an extrovert because
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  you do have to talk to people you know, to get into their pocketbooks.
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  I love it.
• 15:14
  I love it.
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  Alright.
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  When we come back on the small bench chat podcast, we're gonna be talking more with Lisa
• 15:19
  Bell about how to get angel investors.
• 15:22
  You're watching the small fish chat podcast, and we will be right back.
• 15:27
  Hey, y'all.
• 15:27
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  Hi, everybody.
• 16:19
  Welcome back to the small biz chat podcast.
• 16:21
  I'm Melinda Emerson small biz lady, your host, and we're talking with Alicia Bell about how to
• 16:27
  get angel investors.
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  Alright, Alicia.
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  I wanna jump back into this with you.
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  Tell me, how do I effectively pitch?
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  Let's say I realized my brother is an accredited investor.
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  Okay.
• 16:39
  So how do I go about getting my pitch together to to to hit him up for the cash.
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  How do I do that?
• 16:47
  Yeah.
• 16:47
  So you need to be able to summarize your business in, like, 2 minutes.
• 16:51
  Like, so think about simple everyday playing language that, people can relate to and make
• 16:57
  sense.
• 16:58
  You know, one company is, like, I'm the hair Airbnb or I'm the this Uber or, you know, if
• 17:03
  there's a business model that you're similar to that Melinda helps people understand or get it
• 17:07
  fast, I think you have to do you have to tell people why you're qualified, especially for
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  friends and family who know most of your life, if you've never done anything like this or
• 17:15
  don't have any parental experience, It's gonna take a lot of persuasion or convincing.
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  I think the other thing is that you have to show people that you're already doing the work,
• 17:23
  whether that's social validation and whether that's your your business tracks are already
• 17:28
  done.
• 17:28
  Like, you have to have proof.
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  That's really important, for your pitch.
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  And you haven't put it in writing.
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  You have to write it down.
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  People love looking at pitch decks.
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  And, you know, sending that over, letting people purview on their own terms, get back in
• 17:41
  your comments, putting them on your email, let's say, hey.
• 17:43
  Talk to you to update my business that's a great way to passively pitch people all the
• 17:47
  time about what you're doing.
• 17:48
  So I say use those methods to, like, get the word out so that's a warm touch situation when
• 17:54
  you have to activate.
• 17:56
  Now what kind of due diligence processes do angel investors do?
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  Yeah.
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  So I joke.
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  I said, this is not HR.
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  We could we look into everything.
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  We're searching your Google, your social media, anybody who knows you, referrals, of course,
• 18:11
  the things that you provide, just know the things that you're not providing that we're
• 18:14
  also looking at too.
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  Right?
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  You know, of course, we're looking at your financials and your your your business
• 18:21
  objective and goal, but just know we're talking to real people who No.
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  You have done business with you in the past to make sure that you are a solid viable
• 18:31
  investment.
• 18:32
  Alright.
• 18:33
  Last question.
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  What's the best business advice you've ever gotten?
• 18:37
  Oh, okay.
• 18:40
  Do what you love.
• 18:41
  You know?
• 18:42
  I think that's just simple Emerson.
• 18:46
  I like it.
• 18:46
  I like it.
• 18:47
  Thank you so much, Alicia.
• 18:48
  You have imparted us with some amazing really good gyms, and I know that my audience is gonna
• 18:54
  super appreciate it.
• 19:01
  Thanks for listening to the small biz chat podcast with Melinda Emerson.
• 19:06
  Subscribe to this podcast wherever you listen to podcasts and join us next Wednesday for more
• 19:12
  fantastic information and interviews.
• 19:14
  You can find more sources and small business success strategies by visiting Melinda's
• 19:19
  website succeed as your own boss dot com.
• 19:22
  Thanks again for listening, and we'll see you next week.