Venture Capital Firms

Raising Venture Capital? Tips to Get You Started

Raising Venture Capital?

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When it comes to funding a large business venture, venture capital is the best way to do so. Usually venture capitalists are people who manage large pools of funds for a number of investors, and they can be the best source of financing your business endeavor. Usually venture capitalists will only invest in a business that has potential for huge profit, so it is vital that you are prepared when making a presentation to venture capitalists.

It has been said that you have as much of a chance of being struck by lightning as of finding a venture capitalist willing to invest in you. It will be difficult to find a venture capitalist who will invest in your company, but here are a few things to keep in mind when looking to raise venture capital:

Few venture capitalists will invest in a company that doesn’t have a successful track record, much less one that hasn’t even been launched. If you want to truly attract venture capitalists to invest in your company, you need to ensure that your company has been around for six months to a year, and has been showing potential for huge expansion.

While venture capitalists will not always be the best business people themselves, they certainly have a good deal of experience with investing. Don’t try to put on a show of smoke and mirrors to attract their attention, but be honest when presenting your business. You may have to answer a lot of difficult questions, but only by being honest will you stand a chance of one of these venture capitalists taking an interest in what you can do.

You need to know what type of capital you are asking for before going to a meeting with venture capitalists. Early stage capital will help you get set up properly, expansion capital will help you in the rapid growth of your company, and buyout capital will allow you to buy out your initial investors.

Only if you need large sums of money invested in your company should you talk to venture capitalists. Usually they aren’t interested in a few hundred thousand dollars, and you will be better served by looking for an angel investor for that sum of money.

Don’t worry so much about drafting a business plan. A venture capitalist wants to see a business that is established and on its way to success before investing, and drawing up a complex business plan will be the quickest way to sabotage your chances to find a venture capitalist to invest in you.

Try to get yourself introduced to venture capitalists. Most people hesitate to work with people they don’t know, but getting a friend or contact to refer you to a venture capitalist is one of the best ways to ensure that you have a chance of building a working relationship with one.

Make your business model simple, and make sure that anyone can understand the simplicity of your plan. The easier it is to understand, the easier it will be for venture capitalists to find the benefits in investing in it.

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Try to find a strategic investor, or an investor who will not only give you money but will also help out with their experience and knowledge.

Good luck!

-Peter

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