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October 8, 2010

How to Raise Venture Capital in 10 Steps

Want venture capital? Click here to watch this free presentation.

The first step you must take when seeking venture capital is to create a business plan and assemble your marketing materials. Later you will use a VC database to develop a targeted list of firms to contact. Armed with these tools, you can move confidently through the rest of the steps of venture capital acquisition. In ten steps, now:

1. Research and write your business plan. Fill out all ten sections: Executive Summary, Company Analysis, Industry Analysis, Customer Analysis, Competitive Analysis, Marketing Plan, Operations Plan, Management Team, Financial Plan, and Appendix.

2. Develop the rest of your marketing materials: The high concept pitch, elevator pitch, teaser email, and investor slide presentation.

3. Purchase a comprehensive VC firm database. Use it to develop a list of venture capital firms that are relevant to your company. Input such parameters as location, sector preference, and stage preference to narrow the list down to a target group of VCs.

4. Reach out to your friends, family, business associates, and extended networks to seek introductions to venture capitalists.

5. Attend social gatherings and industry events which venture capitalists are likely to attend.

6. Use your teaser email to contact all your targeted VCs and set up in-person meetings for delivering your slide presentation. Contact all of the VCs at around the same time to create a competitive market and a sense of urgency. This optimizes the funding and ownership terms in your favor.

7. Deliver your slide presentation to all VCs that accept your invitation. Hand over copies of your business plan for attendees to hold onto. Do as many of these presentations as possible within the shortest possible time frame, to continue fostering competition among the VCs.

8. Follow up with the VC firms that express interest. Attend meetings to delve deeper into the terms proposed by the VCs.

9. Receive term sheets from firms that are serious about working with you. Hire a lawyer to inspect the term sheets for the best deal. Meantime, the VCs will be conducting due diligence on your business: making sure your financial projections are correct and feasible; doing background checks on your management team; and so on.

10. Receive the Stock Purchase Agreement, the legal document finalizing the deal between your company and the VC. Have your lawyer scour this Agreement to make sure it is optimal for you. When satisfied it will allow you to grow your business profitably, sign the Agreement.

After you follow these ten steps, work closely with the VC firm to grow your company quickly and successfully towards a lucrative exit for all involved.

Want venture capital? Click here to watch this free presentation.

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