4 Tips For Attracting Venture Capital Interest
Wednesday, January 18th, 2012It is the job of an entrepreneur with a great business idea to find start up business capital, and venture capital companies are the prime targets for these success-driven entrepreneurs. However, it is the job of the venture capital firm to turn away and reject about 98% of the proposals they receive in order to find the “diamonds in the rough.”
Attracting the attention of venture capital firms is not an easy task, especially considering the rejection rate in the industry. What can you do to attract VC interest? Here are four helpful tips that come straight from top venture capital firms.
1. Prepare a Comprehensive and Well-Researched Business Plan
Too many entrepreneurs with business ideas race over this important task. In order to acquire business capital, your business plan must be prepared in the proper form and contain all the necessary information to help VC firms analyze your potential.
Never finish your business plan on the first draft. Write it, re-write it, have someone else re-write it, and do it again until you have a polished document.
Always be sure you have the necessary research included such as important market research data, financial projections based on documented sources, and competition analysis.
2. Establish Your ‘Dream Team’
A startup company looking for business capital is only as good as the people who lead it. VC firms want to know that your business will be led by individuals with proven success records. Most importantly, they want to know their investment will not fail due to inexperienced decision makers. Assemble a management team roster that looks like a first-round draft choice.
3. Prepare for Your Interview(s)
A business plan and proposal letter are only the means to getting an invitation for a comprehensive interview. Be prepared to ‘wow’ a VC firm with your preparation. That means designing a 5-10 minute presentation that you have practiced over and over. It also means being prepared with answers to tough questions about your business venture. An unprepared entrepreneur will quickly see a closed door.
4. Identify The Proper Venture Capital Firms
There are too many venture capital firms in existence to just spray every one with a proposal. By researching VC firms and finding the ones who invest in your type of business or industry, you can save a lot of rejection.
A business plan and proposal letter are only the means to getting an invitation for a comprehensive interview. Be prepared to ‘wow’ a VC firm with your preparation. That means designing a 5-10 minute presentation that you have practiced over and over. It also means being prepared with answers to tough questions about your business venture. An unprepared entrepreneur will quickly see a closed door.
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