December 5, 2012
If you have a new business and are seeking funding from a venture capital firm, you typically have to look for it to get it. Often, all of the senior members of the venture capital firm have to agree to provide venture capital financing to you. Upon agreeing to invest in your business, venture capitalists have a vested interest in the success of your company. Usually, in addition to providing financial backing, venture capitals get involved in other types of support, including operational, marketing expertise or management.
Convincing a venture capitals to invest in your project or company is not an easy endeavor, but it can be done if you do things right. Here’s how to go about doing just that.
You can find and connect with venture capitalists by attending seminars sponsored by venture capital associations. In addition to learning about the participating firms, you will also gain networking opportunities. You can also be introduced to venture capitalists by attorneys, accountants and executives of companies that are already doing business with the venture capitalists. Getting introduced is a much better approach than sending unsolicited requests.
Prepare a solid business plan. This is not just a summary of your business idea and the strategies you intend to use to make it successful. You must describe who your competitors are, and how your idea is better.
Make sure your business plan shows that your business has the potential to generate returns on investment, and it has strong protection against competitors. Indicate the strategies you will implement to make it a success. Enrolling in a workshop for entrepreneurs will help you learn how to create a perfect business plan. It will also teach you how to polish your pitch. You can get information about these programs by going to SpringboardEnterprises.org, BusinessPlanBootcamp.com and other sites. Also the Small Business Administration is a great resource and you can visit their website to learn how to create a great business plan.
Keep in mind that investors want to be convinced that you have a big vision for your company. They want to see that you have solid plans to grow and expand the business and make it a huge success. When you give your sales pitch, it is important that you let your enthusiasm show. You want to impress the potential investor, so convey your passion and firm belief in your idea or company.
When you arrange a meeting with the venture capitalists, consider bringing executive members of your management team to the meeting. When you meet with the venture capitalists, it is also important that you negotiate wisely. Make sure you do not give up your ownership rights to your business. These investors are in this deal to make as much money as they can and they would want to own a huge share of your company as well as gain a lot of control of the company. It is a good idea to consult with your attorney before you enter into a negotiation with venture capitalists.