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Beware of Capital Raising Middlemen

There's a sucker born every minute.
P.T. Barnum

America’s Fastest Growing Industry?

This problem of capital scarcity for early stage companies is so prevalent that you may have begun to notice that there are literally thousands of people in the business of "helping" entrepreneurs raise money. At least that’s what they lead you to believe. They have taken their cue from the Gold Rush when the truly crafty business-people made money not through prospecting but by selling shovels to the prospectors. Likewise, today's money-raising services have found a low risk means to separate the cash-starved entrepreneur from any money he or she may have left. They do so in many ways:

    * Matching Services: We'll match your project with one of our many accredited angel investors. Call now! Operators are standing by! Just $199 to register.
    * Business Plan Services: We'll write a business plan for you which will attract funding. Only $999.
    * Finders: I can help you raise money for a fee…and, by the way, I require a retainer up-front.
    * Money-Raising Bootcamps: Attend our weekend bootcamp for $1,195, and you'll discover that it's not what you know but who you know that counts when it comes to raising money.

My two personal favorites are:

    * Online Business Plan Repositories: Post your b-plan on our site for 6 months. Only $59.
    * Venture Capital Directories: VC's are waiting to fund you! For just $49 you can buy our CD directory with 12,952,734 venture capital firms listed on it. (How these can sell in the age of Google is beyond me. PT Barnum was correct about “a sucker being born every minute”.)

In a nutshell, most of these middleman services don't work in 99% of instances. This is also why they won't tell you the Three Dirty Little Secrets of Raising Capital.

Lesson: put very little faith in these services and never pay up-front fees.

Here's some more advice on protecting yourself when dealing with money brokers of any kind.

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