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March 30, 2011

Want to Raise Venture Capital? (3 Questions You Must Answer)

Most entrepreneurs want to raise venture capital, but they go about it the wrong way…. Want to do it right? Check out this free video presentation…

click here to watch free video presentation:

#1 Secret to Raising Venture Capital? <==== In order for your business to continue growing, it's important to reach the presentation stage with a venture capitalist. Obviously they will be evaluating your presentation, but along the way they will ask you three major questions. These are critical, so make sure you're ready for them. These questions are: 1) How much capital you need and why? 2) What is your valuation? 3) What is your exit strategy? How much capital you need and why? When you ask anyone to give you money they want to know why you need it. When you're in front of a venture capitalist the same rules will apply. In fact, you should expect them to if they are going to write you a multi-million dollar check. Providing the right answer means you know your business inside and out. You must come prepared with a full mastery of your projected financial model. We also recommend knowing how all their money will be used for your company. The point is; you need a deep conceptual understand of everything. Along the way the venture capitalist will try to see what kind of poise you have if they offer you less money. So if you're asking for a couple million they will most likely ask what you will do with only a million. In their eyes it reveals your top priorities and what you can accomplish with less. What is your valuation? Some business owners believe this is a trick question and there is no right answer. When a venture capitalist asks you how much you believe your firm is worth, make sure you have the "appropriate answer." Telling them its worth hundreds of millions of dollars is an unrealistic approach. The end result is that the VC won't believe you're ready to handle the toughness surrounding start-ups. However, if you understate your answer too much, he/she will think there is a problem. If you provide a fair assessment of your value, its might be hard to get the capital you need in the beginning. When fair values are given the venture capitalist could limit your bargaining power when talking about actual funding. So what's the best answer? Tell your venture capitalist that the market should decide your firm's value. Once the VC is assured that your company is going to be successful they will create the market themselves. You will find them bidding against each other, which essentially raises your firm's value. What is your exit strategy? This doesn't mean how you leave the presentation; it's all about showing the venture capitalist his or her ROI. The "exit" part occurs when your business is acquired or ends up having an IPO. There are several types of exit strategies, but these are the two most common. When companies have CEOs (the best ones), they are more focused on building successful companies. Venture capitalists already know this, which is why they will work hard for you for many years to come. One of the best quotes came from the founder of FeedBurner; "Make a map of how you want to grow the business, not a map of what you want to happen to the company." This means that successful companies know how to create exit opportunities during their growth. So instead of focusing on ways to exit your company, it's important to build it based on your own ideas. click here to watch free video presentation: #1 Secret to Raising Venture Capital? <====


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