Entrepreneurs are usually impatient about securing venture capital funding. They have a great idea and want it to get started NOW. However, it is always best to step back and get yourself ready for the venture capital firm hunt. Asking these important questions can save you significant time in finding the right VC firm and getting a “yes” answer.
How Much Money Do I Need?
This is an important question to know before you approach a VC firm. If you have performed your market research and product development research, then you should have a good idea how big your potential market is and how you need to get your product ready for it.
Movie producers don’t just start making a motion picture at a whim. They carefully prepare a budget for every step of the way, including pre-production, filming, and post-production. They know exactly how much a movie will cost to produce. The same holds true for your start up. Know how much start up funding you will need to reach your targeted market.
Have I Written My Executive Summary Dozens of Times?
An executive summary is the most important portion of your business plan. It is the summarized whole of the plan that VC firms will read first to find out whether they want to read more. Make sure you send your executive summary past the eyes of many advisors. Have business contacts read it. Have your lawyer and accountant read it. Make changes each time with their suggested input.
To Whom Should I Send my Executive Summary?
Rather than just submitting your executive summary to every venture capital firm that shows up on your radar, you need to have a coordinated effort. A VC firm that specializes in your type of product or industry will more likely read your executive summary and contact you for more information.
Should I Seek VC Funding from another Region?
In most cases, VC firms are strict about their geographical investment borders. VC firms tend to invest more locally or regionally for many reasons, including having close contact with their investment portfolio companies.
However, you can still succeed in getting VC funding from an out-of-state VC firm. Check every VC firm carefully for their investing guidelines. Find ones who are open to great investment opportunities outside their normal geographical range. If your product and company are a good fit, then an out-of-state VC firm should at least give you consideration.