Raising capital for your start-up is no easy matter. Even though funding possibilities have become plenty, the are a few key elements to know if you want to secure VC funding for your start-up or business.
Most banks will not look at you unless you have collateral. And so, many start-ups have turned to the many other funding options available. For example, ambitious entrepreneurs are opting to go the route of Venture Capital, Angel Investors or Crowdfunding to facilitate the progress of their businesses.
If VC funding is an option you would like to consider, here is some expert advice that will come in handy before you make your pitch to your investors.
Know the Numbers
Any venture capitalist you meet is going to want absolute validation that they are betting on a possible winner. Be prepared with a detailed analysis of the numbers and how you see them impacted by the infusion of capital. Knowing your business well will impress upon the Venture Capitalist that you are involved personally and will take care of their money.
Be able to quote figures and to summarize business process plans and project management predictions. It helps the person or organization providing the funding know they can trust you with their money. Show that your company is capable by representing your team, record and talents with verifiable facts and figures. Show a promise of progress.
Time it Right
Most VCs will develop an interest in your business once you have proven that there is a place for it in the in the market. They want to bet on a running horse, not one that is dead or dying. Show increasing demand with sales reports and forecasts. Clearly demonstrate that your business is on the move in an upward direction.
Venture capitalists want to see cause and effect: prove to them that their money will instigate positive results. VC Funding is not to keep a business afloat, it should be able to propel you for accelerated progress and growth.
Hurry Up and Wait
Securing VC Funding capital can consume a lot of time and energy. It is unlikely that the first proposal your company makes will be accepted, therefore, it is crucial that you are prepared to wait it out. Keep immaculate records of all meetings, including dates and responses and follow-up accordingly. You may be pressed to prepare for a scheduled VC presentation by a deadline yet not receive any response for a painstakingly long period of time.
Have all your information readily available when the VC needs it. If it is not available, be prepared to put it together in a short space of time. While the urgency to submit documents to the Venture Capitalist may give you the impression that their response may be immediate. Practice to be patient. Follow up and follow through so that they know you are just as interested in getting them involved in your business through their funding.
Who You Know is Vital
Venture capitalists may be in the business of lending money, however; they probably do it sparingly. One way to maintain your edge is by networking in the right circles. The people you meet in these gatherings are more likely to give you the funding you need because they got to know you or know someone you know.
A VC is far more likely to spend time with you if you are recommended by someone they already have faith in. If you are introduced by someone they trust, your efforts to impress them will be met with more optimism and your chances of success increased considerably.
Get to the Point
We all know time is money and this is even truer for the venture capitalist. Practice your presentation and make it as concise and succinct as humanly possible. Your initial encounter will probably be limited to 60 minutes: make every one of them count.
You message should be clear and straight to the point. Without giving too much detail, you should be able to say what your business does, how it is currently performing and how funding can inject a much-needed boost. The more conscience and clear you are, the more confident the VC will be in you and your business. Remember, many VCs are not necessarily backing the business but the person or people behind the business. The fact that your business is poised for growth, gives the VC more reason to back you.
Have your pitch prepared for a moment’s notice by keeping it fortified with all relevant operational statistics, legalities and other information. Successful business people know they should always be prepared for the opportunity and not wait for the opportunity before they start preparing.
Make sure it is accessible in print and online so that you can instantly share it with a potential investor. Opportunity often shows up without an appointment; don’t risk losing a VC’s interest or your forward momentum by having to put something together in haste.
Cover the Legal Bases
VC Funding terms can be intricate, confusing and subject to rapid-fire change. You have too much at stake to risk being unprepared legally. Hire a trusted attorney and keep him at the ready. Venture capitalist spend most of their time in negotiations, whereas the average entrepreneur does it only a few times. You need strong legal representation and an experienced voice navigating the terms of the investment and preparing your future.
Use this proven advice to propel your company’s progress and secure the capital it needs.