December 12, 2012
Most start-up companies face the challenge of raising the needed cash for operating their business. There are several ways that you can look into if you need funding for your business. One channel that can help you obtain the financial backing you need is Venture capital financing. This type of financing is often made available to the new business in exchange for profits in the business or equity in the business. It is not an easy task to convince a venture capital firm to fund your business or project, but it can be done if you approach them properly. Your business potential and management team must meet the firm’s criteria.
There are several ways to land the first meeting with a venture capitalist firm. You can obtain a list of venture capitalists that invest in your industry. The list can be obtained by going to the website of the National Venture Capital Association at nvca.com. Another way and a much better approach is to get introduced by an accountant or a lawyer who has worked with a venture capitalist. Other possibilities include an executive who works with a venture capital firm. You can also get a respected expert in your industry to introduce you to a venture capitalist. Blind mailings or cold calls don’t often lead to meetings.
Obtaining funding from a venture capitalist firm is a demanding process, and you have to have patience and determination. Keep in mind that venture capitalists want to be convinced that your company will generate big returns on their investment. They are always interested in companies that have a big vision. You should endeavor to convince them that you have solid plans to grow and expand your business and make it a huge success.
Prepare a solid business plan. The business plan is essential when contacting venture capitalists for funding. Investors always want to see a well written business plan before they even consider funding your business. Your business plan should outline your goals for the company, market analysis, target audience and the strategies you plan to utilize to make the business profitable.
Before you meet with the venture capitalists, it’s important that you have a perfect sales pitch. You want to convince them that their investments will bring back huge returns. These investors are only interested in investing their money in a company that has the potential to bring back returns. Be passionate about your idea or project and deliver your pitch persuasively so as to convince them that your business provides great value both for customers and investors.
When it comes to negotiating a deal, don’t try to go about this alone. You need your legal advisor on your side. Talk to your lawyer first before you get into a negotiation with venture capitalists. Venture capitalists are business people and are in this for the money so it is advisable to get guidance from your lawyer. A good lawyer will provide proper guidance and ensure that you negotiate a good deal that allows you to retain control over the direction of your business.