The Value of Prepping for Due Diligence: Interview #2 – Respect
Ever feel like Rodney Dangerfield?
Sometimes, no matter what you’ve accomplished, how great your idea or business is and how stellar your team, when it comes to investors you just “can’t get no respect,” as Rodney famously said. Krista Whitely was feeling that way not long ago. Armed with an impeccable track record in business, building successful companies under her belt and a great value proposition in one of the fastest-growing industries on the planet, Krista wasn’t getting any respect from investors. “They looked at me like I was opening a strip club or something,” Krista recalled when I spoke with her.
Why the disrespect?
She was building a business in the cannabis market.
She wasn’t growing marijuana. She wasn’t opening a dispensary. She certainly wasn’t selling cannabis, CBD oil, pipes, bongs, medicinals, edible pot or anything else to the general public. Instead, she was packaging beautiful assortments of cannabis-related products and selling them directly to (and only to) the legal and regulated dispensaries in and around Las Vegas, complete with a guide to the laws and regulations applicable to cannabis and safe usage recommendations for each product. And she didn’t just think the idea up overnight. Krista had a highly successful career in product development and marketing behind her and a top-flight team. If that wasn’t enough, she was already in profit and growing rapidly. She just needed capital to meet the growing needs of an already proven and successful company.
Yet, she still couldn’t get any respect from investors. Not even a nibble.
Discouraged, she turned to a friend in the finance world. “What am I doing wrong?” she remembers asking. Together, they looked at the entire value proposition and offering. It was a really good business deal, so what was the problem? Her friend referred Krista to Tony Drexel Smith at Blue Moon Advisors. In their first meeting, Tony hit on the problem. There was nothing wrong with Krista, her team, her business or the offering. So what was wrong?
If you’re out seeking funding right now and just not getting the kinds of results you’d hoped for, listen up before you start tinkering with your idea, business model, team, marketing approach or offer. . .
The problem was she was meeting the wrong people.
“What was missing was another me,” Krista told me.
Krista had been talking to mainline investors — angels, VC’s, funds — who simply didn’t share her values. They simply didn’t like the cannabis industry, didn’t want to invest in it and weren’t interested in listening to her pitch. She needed an investor that shared her passion and interest in creating high-caliber product offerings and respected her proven ability to market them effectively. And she needed an investor who shared her belief that the cannabis industry was fun, profitable, on a steep growth path AND perfectly legal if done within the regulatory framework established by lawmakers.
Together, she and Tony looked for the right match of values, even as she went through the Blue Moon due diligence process. One thing that showed up as a need was a CFO. Tony and his team put Krista’s business plan, financials and related materials through their paces while thinking about the ideal funding and CFO candidates. They also worked on the Company’s entire branding, messaging, website and investor documents language to ensure complete state and federal securities regulations compliance in preparation for seeking capital.
Planning ahead for due diligence ensured respect AND got her the helper she needed
One of the things Krista loved about the Blue Moon process was its organizational simplicity. Every step of the process was outlined in advanced and segregated into major areas, then every single step necessary to complete due diligence was listed under each area. She could see the various pieces coming together into a complete whole. And, when finished, every document involved in due diligence, business and market proofs, financials, marketing and messaging and investor documents was organized and located in one place. This provided the means to access everything and quickly provide bona fide investors with any information they might need.
After just a few short weeks of work, Altitude Products scored 931 on the Blue Moon CRR. They were not just ready for funding, but fundable. Now, they just needed to meet the right investor(s).
Then meet the right people
Through Tony, Krista met a key individual at an investment fund. It turns out they shared the values and experiences of being an entrepreneur, a mother, a wife and a pioneer in a brand new, but fast-growing industry. Through this fund, she was introduced to a CFO candidate that she ended up hiring.
Just two months after meeting Tony Drexel Smith and beginning the Blue Moon due diligence and funding preparedness process, the same fund provided debt and equity financing for Altitude Products. Today, the company is expanding throughout southern Nevada and exploring markets in California.
As Krista said when we talked together, “the entire cannabis industry is a start-up.” Everyone and everything are new and opportunities are immense. But, as in any pioneering operation, risks are also present, both actual and perceived. When charting new territory, your company, like Krista’s, needs a Sherpa who shares your core values and believes in your team and your industry. Someone like Tony who can assess the fundamentals, apply best practices from other industries and create a trail to the Promised Land that investors not just understand but want to travel along with you.
With Blue Moon and her funding source, Krista had found her Sherpas — mentors, not just a consultant and a money source; and that was important to her as well. “It gave our entire team the confidence to be bold, knowing our mentors had our backs,” she told me. She still meets with Tony once a week to discuss strategy and progress.
Key Takeaways: You’re not in this alone. Business is a community endeavor. Sometimes the only thing missing for an entrepreneur is meeting the right helper — one who shares their core values and their passion for a particular industry or idea. To find that needle in the haystack it often takes an impartial third party perspective that can look at your offer with fresh eyes and understand who might be the right fit for your funding needs. You still need to be fully vetted and prepared for funding, but having that Sherpa who not only gets you ready for the trip but also knows where to lead you is priceless.
Blue Moon Advisors is a partner of Intelliversity and Tony Drexel Smith will be a faculty member. Please contact Robert Steven Kramarz (Rob), Intelliversity Executive Director for a warm introduction. Reach Rob by setting up a phone conversation on his calendar here.