Evan Loomis ’03 is no stranger to the challenges of raising startup capital. In 2010 he co-founded TreeHouse, a sustainable home improvement store based in Austin, Texas. The concept of a green “Home Depot” had first occurred to him as a passing thought while skiing in Colorado with a friend. But only after he raised $18 million did TreeHouse become a reality.
“Raising capital is one of the most difficult challenges faced by today’s entrepreneurs,” Loomis told Mays Business School students in a private-equity class. Loomis’ own experience working with investors was a process of trial and error, with as many failures as successes. “It takes a lot of courage to conceive an idea and then go raise money,” he said.
Loomis received a bachelor’s in business administration from Texas A&M University in 2003. Before cofounding TreeHouse, he spent two years as an analyst at CITIGROUP and served for two years at chief operating officer at the Wedgewood Circle, LLC.
Now, in addition to serving on the board of TreeHouse, Loomis is vice president of Corinthian Health Services, a mentor with TechStars, a venture partner at Praxis Labs and founder of Tradecraft. Recently, he co-wrote a book with Evan Baehr, Get Backed, which aims to help entrepreneurs build their perfect pitch book and raise money from business angels and venture capital firms.
Drawing on his experience navigating the waters of private equity, he shared his top 10 takeaways with Mays students.
- Get your ideas out of your head and build a killer pitch deck. Raising money from investors for your startup is challenging at any stage and requires a great pitch.
- Know your funding targets: angel groups, angel investors, incubators, accelerator, venture capital, friends and family.
- Adopt the 20x Rule. Practice your presentation to potential investors at least 20 times.
- Raise friends, not cash. Computers network, but humans build relationships.
- Answer the HUMAN questions first. Do I like you? Do I trust you? Do I want to invest?
- Become a storyteller. Share what led you to develop the business idea.
- Follow up with (extreme) gratitude. Handwritten thank you notes are a must. Gifts are a wild card. They should be appropriate and specific to discussions you have with potential investors.
- Take a sip of water. Asking people for money is very difficult. After you ask for the money, take a sip of water to avoid saying something out of anxiousness.
- Think like a spy. Read books on the CIA rather than sales books.
- Have grit. Be prepared to have an unbelievable amount of meetings. “If you have a cool idea, prepare to meet with 100 potential investors,” Loomis explained. “Of those, 25 may show interest. You may get only 10 to invest. But getting the 100 meetings is really hard. Most founders fail here. They treat investors as transactional.”
Loomis encouraged the students. “I was literally in your chair 10 years ago. I had no idea about entrepreneurship. But there are two pathways: 1) You can work for others. 2) You can create jobs for solving real problems in the world,” he said. “When you’re an entrepreneur, you have the opportunity to create the future. I would love to see more Aggies start companies.”