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Investors weigh in on how entrepreneurs can scale their business locally and nationally

By Zack Frink

Elevate Dayton is collaborating with TabernacleTalks! to publish an ongoing series of expanded stories complementing the show. In the episode titled, "The Perfect Pair...Shoes That Is," Shane and Shawn Ward discussed their beginnings, working with family members in business and building their brand. Elevate Dayton continues the conversation by looking at how entrepreneurs can secure investment at a local or national scale.

Entrepreneurs often hit the ground running their businesses, but eventually get to a point where they need additional funding to take it to the next level. Elevate Dayton spoke to several investors about what they're searching for in businesses and how to network with the right people.

Kim Frazier, the director of growth initiatives at the Entrepreneurs' Center, has helped build and scale numerous businesses in the Dayton area. She said most investors are more interested in the entrepreneur than the business.

"Entrepreneurs have to have that grit which is going to get them through any kind of challenge," said Frazier. "But then they also have to be coachable." She also noted that entrepreneurs have to believe in their idea, but not so much that they don't listen to advice.

When it comes to finding investors, Frazier warns that entrepreneurs should take funding from someone who adds value to their business.

"You take investment from somebody who can help you with marketing, manufacturing or somebody who can just coach you in a personal way," she said. "You take an investor who's going to be in a relationship with you."

Frazier cited several ways entrepreneurs can network and make connections locally. She said the Entrepreneurs' Center is raising a fund and that investors will be visiting the Dayton Arcade. Frazier also recommends attending the Dayton Chamber's "Bankers Roundtable" events, hearing pitches at Launch Dayton's Early Risers Academy and getting involved with the Miami Valley Venture Association.

Nancy Hayes is an angel investor based in San Francisco that can shed light on the venture space. The University of Dayton alum has previously held senior executive positions in corporate America and nonprofits in addition to serving as the Dean of the College of Business at San Francisco State University and later became the university's CFO.

She recommends entrepreneurs have a firm understanding of venture investing because they could potentially give up a large portion of their company. Hayes said entrepreneurs should consider having a portfolio of different ways to fund their company so they're not dependent on giving away equity.

"One of the best ways is what we call non-dilutive revenue. This is grant funding, particularly for those involved in certain aspects such as healthcare and scientific advancement," she explains. "Those grant funders do not take ownership of the company, but the company has to respond to the grant requirements and meet those."

Other ways of funding companies include sharing profits and revenue and taking on debt, said Hayes.

She likes to make a baseball analogy to relate an investor's mindset. "We would say out of every 10 investments, you have one home run that's 10 times what you invested and maybe two doubles and triples," said Hayes. "You might have three or four base hits where you just get back what you invested. Then you might have three or four total losses or partial losses so it's a very risky asset class."

Another investor who's familiar with this risky asset class is Antwanye Ford. He's the president and CEO of Enlightened, Inc., an information technology and management consulting firm headquartered in Washington, D.C., and has offices nationwide.

Ford said investors look for an experienced leadership team, a proven track record and the proper infrastructure within the business.

"You need to understand this money needs to be protected," he said. "It's not free money, it's for the purposes of what we're investing in."

When it comes to pitching, Ford wants entrepreneurs to do their homework to understand how their goals align with an investor's goals. He favors using baseball analogies too.

"Particularly for us as African Americans or as a person of color, you're going to come in with two strikes with a fastball coming so you got to really convince that person that you have the wherewithal," said Ford.

The deciding factor for venture investment comes down to math.

"So many of the companies that they do invest in are not going to make it or are not going to exit," said Hayes. "They have to make up for their investment in those in order to deliver a return to their investors. So it's all really math. The bigger of a fund they have, the more profit they need to deliver at the end of their fund."

Ford expanded on a similar note. "Ultimately, they're investing in you," he said. "They're saying, 'I'm invested in you and your vision, but can you get this done behind my money?' and that's the bottom line."

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