A new business looking for startup financing is likely to have the best chance approaching angel investors rather than venture capital. Angel investors help provide seed money for businesses not yet in the “prime time” of their operations, meaning they are still in product development and have not yet brought their product or service to market.

However, obtaining start up financing from angel investors is still not an easy task. A young business must convince the investor that their new business idea is market-worthy and potentially profitable.

Thankfully, a young business with these three business cornerstones in their bag will find that gaining the attention of angel investors will be much easier.

A Valid Idea

Not every new business idea is worthy of startup funding. Some big new ideas start out quick out of the gate and are good concepts. However, after research and analysis, the idea may fizzle. By contrast, even a mediocre initial idea can become a home run with the right finessing of the concept and market strategy.

To gain attention of angel investors, your business idea must be past any concept stage. You must present the idea with plenty of solid background about how it matches a market need and show research that customers are interested in buying.

A Solid Presentation

A great business idea cannot get very far without a convincing pitch and presentation to a potential angel. How you sell your story to an angel investor is what will set you apart from the other choices.

A solid presentation will include confidence in the presenter, details behind the scenes of management, and a compelling vision packaged into about 15 to 20 minutes. Also be sure to not only practice your pitch, but have answers ready for any potential question that an investor may ask.

Rational Data

The final lynch pin in securing startup funding from angel investors is having rational and reasonable data to back up financial results and projections.

Remember that angel investors are going to choose to invest in businesses with valid data backed up by research. Any “concepts” and “what ifs” do not work in instilling the confidence to send you investing dollars. Be sure that even if you have no previous transaction or income history, you perform the necessary market research and business modeling to prepare a rational projection of sales, income, and expenses.

Venture capital firms are notorious about choosing only select candidates for their funding. Out of hundreds or even thousands of potential candidates, only a few are selected as investment opportunities. However, not only do venture capital firms offer money to help a new business get up to speed and meet their full potential, but they are also there to act in an advisory capacity as well.

So what other roles to venture capital firms play in a developing business? Here are just a few.

General Business Strategy Advice

Venture capital firms are in the business of helping other businesses succeed. In doing so, they have acquired a great deal of experience and wisdom along the way.

Do not expect a VC firm to hang back and be a “silent partner.” Instead, expect a venture capital firm to offer plenty of advice in how a business should proceed with their strategies and offer new strategies in addition.

Develop a Financing Plan

Obtaining venture capital is similar to getting a loan. While banks and other types of investors will usually set up a regular payment plan and expect a business to stick to it, venture capital will clearly outline how they expect to be repaid for their monetary contribution.

It is traditional to expect that venture capital firms may not expect any type of repayment right away. However, instead expect them to become equitable owners in the company, and design their “exit plan” with certain amount of preferred shares for an IPO, for instance.

Refine the Business Plan

A business seeking venture capital will get nowhere without a business plan. But once a venture capital firm decides to back a new business, they will likely offer advice on how a business plan can improve and be refined even more.

Marketing Advice and Strategies

A new business may have a super star lineup in their management team. However, there is always additional benefit from venture capital firms with national and even international marketing savvy. Expect that a venture capital firm will provide valuable marketing strategies for newer businesses and products.

Develop Contingencies

New businesses are likely to fail. Even a large percentage of venture capital backed businesses will fail. Venture capital firms are accustomed to this risk and can also provide additional and valuable advice and plans for contingencies when a business does not come together as planned.

New businesses trying to get a foothold in their industry can do extremely well with venture capital. However, financing is only a small portion of the role venture capital firms play. If you secure VC funding, expect an experienced venture capital firm to become a valuable, active business partner in your new endeavor.