FREE online courses on Venture Capital Funding - What do Venture Capitalists look for - Winning strategies

 

To help you and your business venture tap in the cash flow, use the following winning strategies to ensure a “yes” from Venture Capitalists:

 

Aim for a big market

Someone about to invest $500,000 would prefer to have that money work towards capturing a share of a $22 billion market rather than a share of a $100 million market.

 

Look for commitment

Pitch to the Funds/Venture Capitalists that are interested in your product/service.

Not all funds invest in early stage capital. So, even if your idea is a good one, it won't matter much if you try to get late stage specialists to look at your proposal. Usually, they won't. Special funds are often set up to make investments in e-commerce tools or applications or capture opportunities in broadband content development.

 

Caption: Go to a Venture Capitalist who is interested in your product.

 

Know who you're talking to

One of the most important aspects of accepting venture capital money is the particular Venture Capitalist you will work with. Deal at the top, involving the CEOs of both the strategic partner and the start-up. Many Venture Capitalists will tell you that strategic alliances need acceptance from the entire organization, and this usually starts at the top. This is what is often meant by “value added.”

 

Right contacts are vital

Your Venture Capitalist should be someone with the right contacts for your product and/or service. They should make strategic alliances for you, and help you to recruit good management people. They can advise you best because they know the area you want to conquer.

 

Caption: Venture Capitalists with the right contacts can bring you to the attention of those who are successful in your arena.

 

Make realistic assumptions

Demonstrate that you have a firm understanding of the market place. Use your efforts to show that you can segment your market and provide something attractive in it.

 

Provide clear milestones

This includes what you have already done and what you intend to do. If it will take six months to complete a portion of your plan, don't claim that it will take only 3 months. It is best to set up realistic expectations at the beginning. Besides, Venture Capitalists often have a good idea of how long things take because they work with lots of different companies every day - usually more than you do.

 

Address your weaknesses

They will show up sooner or later, anyway. Usually, proclaiming that no loopholes exist will do you no good. You can't get help if you don't ask for it. Let the Venture Capitalist know where he/she can provide you with assistance. This may even create a stronger bond between the two of you.

 

Don't exaggerate

Don't mess up things with a lot of self-serving sentences, such as, “We will be the best, the most creative, the most awesome content generator ever to hit the World Wide Web.”

 

Caption: Premature boasting is enough to send a chill down the spine of most serious investors.

 

Be buzzword compliant

Don't confuse the “Internet” with the “World Wide Web”, “hits” with “visits.” Don't say “click through rates” unless you mean advertising.

 

State why you're different

State what is it, exactly, that makes your proposal stand out from the crowd? Be concise. Explain why what you're doing hasn't been done before or why the previous execution didn't meet with success. What have you got that will work? Why will it work?

 

Reveal the strengths of your team

Explain what team members will bring to the enterprise. Put forth their professional, and perhaps, personal achievements, and interests. Be specific in presenting their skills.

 

Justify your target customers

It's not enough to just say “everyone will want this'' or “if we build it, they will come.'' Try to provide a strong rationale for why people will want to use your product/service and how it will benefit them. Spell it out for the Venture Capitalist and you will improve your chances of getting funded.

 

Caption: Tell the Venture Capitalist clearly whom you are targeting at.

 

Keep it simple

Don't overcomplicate things, as it can put you in trouble. Here's an example of how to keep it simple: “The objective of our Web site is to make it easier for existing and future customers to do business with us by providing them with information and services to grow their business.” Nothing more needs to be said.