9 forms of capital by Patrick Bet-David every entrepreneur should know
I hear many-many people raving about how they need to raise money, looking for hundreds of tactics, tips and tricks that will help them convince an investor and make the leap. Why is this happening? Because having your first 100, 500 or 1000 happy clients (people that bought for you more than once and you have a constant, positive relationship with them) seems too hard. In short, we will have the money means we have more power and we’ll do whatever we dream about.
Five real life scenarios:
1. Some never do the steps, never pitch in front of investors, the business eventually dies and they think it’s because the “lack of resources”, which may sound like a good excuse, but it’s not. Mark Cuban explains what actually happens.
“Companies fail because of a lack of brains and effort.” — Mark Cuban
2. Some do the steps, get in front of investors, but don’t understand their own business and/ or why, how and when the growth will be possible, so they, don’t get funded.
3. Some do get funded, start think they are capable and smart, start taking it for granted, stop working as consistent as before and/ or simply spend the money in a stupid way, purchasing equipment just because they can, having no long-term mindset and objectives, no clear budget, no P&L.
4. Some do get funded, don’t take it for granted, keep working, miss it somewhere else. Of before they had the “I need money” mindset, they are now in the “I have money. I need to spend it” scenario, which, simplified, shows poor understanding of finance.
5. The very few use the funds in a way that facilitate long-term growth that’s on purpose.
In fact, very specific businesses really need financial capital.
- Do you want to build big a factory? Then yes, you do need capital.
- Can you lead a big factory? If no, starting one might be the easiest way to hitting the company, the people and the capital to the ground.
- Did you proved your product or service through enough sales? No investor will be interested in your perspective on how the business can grow. They want their money back and more, so they need to see good numbers.
My favorite growing tool?
Sell to your ideal customers, over deliver and make them enjoy it so much they would buy again. And again. And again. If you can not do this yet, money won’t do the job.
The reason why I decided to write this specific article is a video by Patrick Bet-David, explaining 9 forms of capital most people are not spending to much time exploring or even thinking about. I strongly think that by understanding and the ones that are suitable for your business can give you a totally different perspective on money and long-term growth that is based on results and not on hopes.
The 9 forms of Capital for Entrepreneurs, by Patrick-Bet David from Valuetanement
- Finacial: Money
- Spiritual: Product based on a belief
- Land: If that is relevant to your business
- Social: A cause, a group of people who want to do something about a cause, to correct an injustice to make a difference in the world
- Cultural: Product for a specific community you fully understand and resonate with
- Experiential: You worked and had great results on important projects that make you know your target market a lot more than most people
- Intellectual: Know-how, knowledge wisdom, patents, trademarks
- Natural: Renewable energy
- Material: Tools and machines
Key in order to raise money, do big partnerships and grow:
For anyone to even consider offering you any form of capital from above, you have to ask yourself what form of capital you already (honestly) have that is relevant to your business. If you do/ when you do, a real discussion can take place.
With or without investment, by already having some capital, even if it’s not the capital you expected in the first place, growth can happen.
You can learn about each form of capital more in depth by watching Patrick’s 15 minutes video: https://www.youtube.com/watch?v=WV3zo0uJwJo. Make sure you subscribe to his Youtube channel. His videos are experience based, very practical and I don’t know anyone on Youtube that’s delivering what Patrick is delivering.
Before you go, if you have friend that’s an entrepreneur and you think he should be aware of the 9 forms of capital, please-please share this article or Patrick’s video with him. He will thank you!
With joy and kindness,