The Power of Using OPM

Keys to the Vault: Lessons from the Pros on Raising Money and Igniting Your Business
Expand the Pie Before You Divide It

Most people are in the “rat race” financially, going round and round, living paycheck to pay check. One of the keys to getting out of the rat race and creating financial independence is knowing the secret of leveraging other people´s time and money. The ability to raise and use OPM and OPT is crucial to obtaining the financial freedom you deserve and desire.

The rich know that one of the keys to financial independence and the creation of wealth is the ability to raise and use OPM–Other People´s Money. It is simply too hard and time consuming to attempt to create a business without leveraging the resources of other people, which includes not only money but also other people´s time and abilities. One of the major points in Robert Kiyosaki´s book, Cash Flow Quadrant is the difference between an ´S´ (Self-employed), and a ´B´ (Business Owner). An S will attempt to do everything themselves and will not delegate, which dooms them to staying small and working hard. On the other hand, a B will leverage other people´s time and money to ramp up the business as quickly and efficiently as possible.

Most of us have had the experience of raising or borrowing money, whether it´s for a new car, buying a house or starting a new venture. Raising money for most people can be frustrating, confusing as well as traumatic. My experience, having structured and negotiated deals worth over $1 Billion, is that the reason raising money is so confusing and intimidating is because most people don´t understand the psychology or the point of view of the investor.

Usually, people trying to raise money don´t or won´t do the necessary work to be able to successfully get all of the money they want and need. In other words, people tend to think that if they have a better idea or have created a better, faster, cheaper, revolutionary, higher quality gizmo or service, then it must be obvious to everyone that it is a foregone conclusion that it will be successful, that everyone will, of course, love it and the big bucks will start rolling in. Nothing could be further from the truth.

The reality is that most entrepreneurs fall in love with their ideas or inventions to the point that they are blinded by their own brilliance and thus are incapable of seeing the risks and potential downside or problems that any business venture will face.

Given that there is no shortage of investment capital available (the last figure that I saw was $175 billion raised in the U.S by Venture Capital funds last year and $72 billion was waiting to be invested in deals) and given that there is no shortage of new ventures being created that need or are looking to get funded, why is it that only one out of every hundred deals that a venture firm or an angel investor sees gets funded?

The answer is not as hard as you might guess. Investors MUST invest and lenders MUST lend. That is what they are in business to do. They make no money unless they put their money to work. The fundamental problem, it seems to me, is that most people trying to raise capital are not on the investor´s wavelength—they don´t know what an investor is looking for or even how to talk to him.