While most entrepreneurs feel like their idea is perfect for venture capital financing, only few are able to make it to their goal. The reason is simple. Your idea may be eligible for other funds but not necessarily for vc money. Remember, venture capital is the most powerful but hard-to-attain funding option. However, you can definitely do something about it. There are certain things that you must do before starting your venture capital raising campaign.
Do These Before You Think Of Venture Capital Financing
- Check Out The Other Options First
There are various other funding options such as friends and family, incubators, crowdfunding, angel investors and others. Ideally, you should try out these options first so that by the time you find you first VC, your startup looks more presentable. Venture capitalists prefer to fund startups at a later stage so try to push your startup as much as you can without their help. You can also shed some from your personal savings if possible. This will make it easier for investors to gain confidence in your business.
- Have A Unique Idea
An idea that aims at bringing a major change in the society or in consumers’ lifestyle is definitely a head turner. It has to be unique to grab the attention of the customers. The more it is in demand, the higher is its investment potential. Though it is a prime prerequisite no matter which funding option you choose, it is even more valuable during venture capital raising.
- Build An Impressive Leadership Team
Next to your idea if there is anything that VCs look for, it is your management team. No wonder, the success of a business primarily depends on the talent, smartness and commitment of the team. Before you approach a VC, make sure you arrange a great team for your business. The best part is, even when you have raised capital, your team will continue to remain your biggest asset provided you manage to retain it.
- Identify The Right Investor And The Right Fund Size
Chasing the wrong investor is a waste of time, money and energy. Unfortunately, this is one of the common mistakes that entrepreneurs make. Before chasing, see if the investor is interested in your industry and investment stage. Every firm has its personal choice - some invest at later stage, some at seed while some invest at all the stages. Similarly, they invest across wide variety of sectors such as Technology, Energy, Finance, Hospitality, etc. At seed stage, every second is crucial so look before you leap.
- Hire A Lawyer And A Financial Advisor
Some things are best done by experts so, without any delay, get in touch with a good investment lawyer and a financial advisor. Venture capital financing involves a lot of legal formalities for which you will always need the help of a reliable lawyer. Apart from this, you must have a financial advisor by your side to guide you through the business valuation process. Valuing your business is critical before raising venture capital as it helps you know the actual worth of your company. This increases credibility and transparency helping investors gain confidence in your business easily.
- Boost Your Network
Networking is a must for successful venture capital raising. VCs prefer to talk to entrepreneurs who get introduced through their networks. A warm introduction significantly increases the chances of success of the deal as the investors consider them as reliable opportunities. Needless to say, you must start strengthening your network so that you find someone to introduce you to a potential investor.
These are some of the most crucial things that can increase your chances of getting access to a potential VC. If you have any more queries regarding raising venture capital, feel free to get in touch with us at Merger Alpha.