NEF’s Stew Nelson unpacks the Solution to the Milestone Gap™

Any entrepreneur will tell you that raising funds is not easy. Founders wonder why, with such a great idea, outstanding team and great plans, investors aren’t returning their calls. What is the problem?

It’s a big issue for founders with 75% of their time taken for up to three months or more, raising money can be a time sink for any founder.

Stew Nelson can tell you what the problem is and how to fix it. Well known in SE Michigan, Stew is an investor, past president of NEF, CEO and founder of Mayasil, and partner in the consulting group, MODG. On Wednesday, September 6, Nelson unpacked this problem with the “Entrepreneur’s Equity Roadmap™: Raising Money Without Giving Away the Business” at Spark Central in Ann Arbor, MI.

The problem is the gap between founder’s expectations and the investor’s expectations. Called the Milestone Gap™, by Nelson and co-writer Gary Hazan, it refers to the gap between what a founder sees as a milestone (completing a prototype, for example) and what an investor sees as a meaningful milestone (achieving financial goals or valuation). Like ships passing in the night, founders and investors have a brief encounter, but then drift on with the founder wondering, “What happened?” “There’s a gap between what the entrepreneur wants to show vs. what the investor wants to see,” Nelson says.

Closing the gap? Following are some of Nelson’s basic rules the founder needs to understand to close the gap.

For a start, founders need to address their pitch in the investor’s language; learn about the investor’s side, and deliver a message that considers questions the investor will have. Too often, the founder pitches their great idea, plans for the business, and thinks it is what will persuade the investor. Better to take a deep dive into understanding what the investor wants to know about your business. Make sure the goals you outline in the pitch are the goals an investor wants to see achieved. An investor will want to see that the funding round you are asking for will take the founder’s business to the next round of funding. Nelson calls it creating an “updraft.”

The investor wants to know about the monetary needs of the business and how the founder plans on addressing them. Monetary needs include product development, costs to do marketing and sales, and head count costs.

Of course a successful funding raise comes with it’s own costs—giving away equity and control. For a lot of founders the hardest one to swallow is the loss of absolute control. “Think of it this way, do you want to be rich or king?” Nelson said. It’s important for the founder to understand that in their relationship with an investor you must play by the “...Golden Rule: he who has the gold makes the rules.”

The Entrepreneur’s Equity Roadmap™ is far more detailed and thorough than the scope of this article can cover. It’s easy to learn more: all you have to do is visit the NEF website,, and go to the Resources page. You’ll see a link to the PDF on the right side. While you’re on that page check out the other great resources NEF has for founders.