As a startup entrepreneur looking to setup a new business or running one already, you will no doubt desire to seek out venture capital at one point or another; you could certainly use a few more dollars to expand your business even further. While angel investors will typically give out between $5,000 and $100,000, venture capitalists on the other hand are capable of issuing million dollar checks to help fund a business. Simply put, venture capitalists are able to support growth and development for start-up business from setting up to much later stages.
Since large amounts of capital are deployed by venture capitalist, securing funds for your business from these corporate investors is by no means a trivial process. There are a few things you need to be aware of when trying to get venture capital for your business. Here are 5 tips for getting venture capital funding that will give you an added advantage when trying to secure funds for your business.
#1 Ensure Your Business Idea Is Well-Suited For Venture Capital Funding
A lot of startup entrepreneurs believe they have incredible ideas that are well worth investing in. Though a good number of these business ideas are worthwhile to invest in; the reality however is that not all businesses are compatible with venture capital funding. Various businesses have different potential for success; therefore the amount of capitalist fund worth investing into them will vary. Small businesses, like coffee shops, snack bars and restaurants, can easily obtain a bank loan to get started. Since venture capitalists deploy millions of dollars at a time, it is important for you as a startup entrepreneur to first understand the size of the market you will be operating in order to determine whether your business is compatible and well suited for venture capital funding. Don’t expect venture capitalist to invest a your business if they don’t think the market is big enough.
#2 Secure a Referral or a “Warm” Introduction
Making cold calls or sending unsolicited emails to investors is not best way of getting introduced to a venture capitalist. It’s definitely a no-go area for any startup entrepreneur when it comes to securing venture capital funding for your business. Nowadays, most venture capitalists expect startups to make use of active networks within or outside their environment in order to get introduced. Doing this ultimately proves to the investor that you know how venture capitalism works and that you have built a trust connection with someone who knows you and the investor. Success in securing venture capital funding comes when an investor sees your business as an thrilling opportunity for them, and they are able to mitigate some of the risk that comes with funding your their business through a ‘warm’ introduction.
#3 Know The Type Of Funding You Need
Asides from having a great business idea and taking all the necessary steps to make it a reality, knowing the type of funding you require and which investors fit the profile is also another useful tip for getting venture capital funding for your business. Whether you are about setting up a business or running one already, research your situation well and determine for yourself if your business requires funding from a Series A, Series B or Series C venture capitalist. Be sure to do your homework, carryout the necessary research and know which type of funding you going to need. This may seem as a lot of work, but the results far greater than the trouble in the end.
#4 Always Have A Strategic Growth Plan In Mind
Another useful tip in securing venture capital funding for your business is to always have a strategic growth plan in mind. As a start up entrepreneur, you should be able to throw more light on the current position of your business and its likely path in the next two, tfundfundhree or four years. Endeavor to always make reference to this plan when pitching to an investor because it gives perspective to your investors on where you stand with your business and also the impression that you a solid understanding of what you’re doing today and in the years to come.
#5 Be Well Prepared When Pitching Your Business
Most venture capital investors typically give up to 30 minutes or one hour for startup entrepreneurs to successfully pitch your business idea to them. As such, you need to be very concise in the way you deliver your message while going over your business plan with potential investors. Prepare well by practicing your pitch before the meeting and avoid unnecessarily long PowerPoint presentations. Keep your slides simple, well organized and containing only information that is relevant to your presentation. You can also search the internet for articles on how to pitch your business plan to an investor.