Congratulations!  You’ve been chosen to meet with a venture capital firm based on your business plan and proposal.  Getting that face-to-face meeting is a critical step in securing venture capital to fund your business.  When you meet with a group of venture capitalists, remember that first impressions are important.  How should you introduce you and your team to a VC firm?

Be Prepared

First, be sure that you and your team are prepped before meeting with a VC firm.  That means practicing your individual pitches with each other, getting the timing down, and answering all anticipated questions.  You don’t want to waste the time of the people at the VC firm.

Keep It Short and Concise

You will probably be asked about your background, as well as the rest of your team’s experience.  Each of you should be ready to give a short but concise summary of your expertise and background.  Tell them your name, your position in the company, and give brief but important one liners from your previous positions. 

For example, you might say, “I’m Steve Jacobson and I’m the founder and CEO of our startup.  Previously I was VP and head of development at TechWare Software, where I spearheaded the development of a database program that led to more than $500 million in sales.” 

Though you want to keep your background short and concise, you still want to highlight the major achievements you’ve made.  Feel free to take more than 30 seconds, but no more than a few minutes, to point out why you’re the best person for the job.  Your quick, high-level background will give the venture capitalists a bearing on your qualifications.  They will also be judging you based upon how you interact with them and your team throughout the presentation. 

And remember, though you are there to convince a VC group that you are qualified to lead your business idea to great success, your main objective is pointing out the business itself.  Be accurate and highlight your accomplishments in your introductions, but move on ahead with the business.

Be Yourself

Although it may make some people uncomfortable standing before a group who will ultimately judge whether you make the grade or not, you and your team all still need to be yourself.  It’s tough to be scrutinized and judged by others, especially in a situation where a lot is at stake, such as the future of your business.  But learn techniques to control your anxiety so that your natural personality comes through.

Also, don’t try to pull off becoming a “game show host,” giving cheesy smiles and making “come on down” type comments.  Taking on another personality to hide your own anxiety leads to false impressions and insincerity.  Simply talk calmly and normally in your own voice and pace.

Meeting with a VC group can cause anxiety.  However, with practice and preparation, you can tackle the challenge and come out a winner with your VC proposal.

For many young entrepreneurs, age can be a detrimental factor.  What firm would want to invest in a young person, fresh out of college with no “real world” experience, who thinks he has the biggest idea since the telephone?  Though young entrepreneurs may have negative stereotypes pitched against them, there are still benefits to being young, and using those advantages can help reap venture capital for a great business idea.

If you’re a young entrepreneur, here are some tips that can help you and your business succeed. 

Create a Solid Plan

Venture capitalists may question young entrepreneurs because their ideas may appear lofty, not rooted in “real life” experience.  Overcome this hurdle by translating your idea into a tangible reality.  A solid, well-written business plan will help you demonstrate that you have both the creative sense and rational business skills to bring the enterprise to fruition. 

Use All Resources Available To You

Are you tech savvy?  Do you have wealthy parents?  Do you have a car?  A computer?  A long email mailing list? 

Utilize all the resources available to you to the greatest extent.  Many young entrepreneurs are computer wizards and can create stunning websites.  If you are one, make a great website for your business.  Use your social network to promote the company and receive a viral buzz.   Ask for a small loan from your parents if they are willing to invest in your bootstrap stage.  Use your car to make personal deliveries.  Use your mailing list to market your services.  Anything at your disposal can be creatively used to promote your business. 

When it comes time to meet with the venture capitalists, they will be impressed with your tenacity – and they may find value in the types of “young” and trendy advertising, such as social networks, that you have already successfully accessed. 

Approach a “Youth” Friendly VC Firm

While all venture capital firms are looking for good business ideas, regardless of the age of the entrepreneur, there are some that are “friendlier” to young entrepreneurs than others.  These will be the venture capital firms that have an appreciation for early stage enterprises, such as:

• Draper Fisher Jurveston
• Kleiner Perkins Caufield & Byers
• U.S. Venture Partners
• Band of Angels
• Accel Partners
• BioAdvance
• North Bridge Venture Partners
• Redpoint Ventures

Join Your University’s Venture Capital Organization

If you are still in college, take advantage of the opportunities available through your campus.  Many universities hold VC seminars and forums each semester, inviting industry guest speakers who discuss the current state of VC and how young entrepreneurs can best position themselves for the opportunities. 

Stanford students can join the Stanford Venture Capital Club, as well as the Stanford Venture Lab (VLAB), which is the San Francisco chapter of the MIT Enterprise Forum.  Harvard students can participate in the Harvard College Venture Capital and Private Equity Club.  From the west coast to the east coast, young entrepreneurs in college can begin building their VC repertoire and network through on-campus organizations.  Check with your college’s business school for the VC clubs that you could join.

Even younger students, such as ones currently in middle or high school, can even take advantage of opportunities on college campuses.  Those in the Bay Area can take part of the Young Entrepreneur Venture Capital Competition held at the Haas School of Business, UC Berkeley.  This will not only help build your VC network at a young age, but can offer you funds to attend college. 

Your age can certainly be used to your advantage.  Capitalize upon the resources in your network to demonstrate that your age is no match for your business savvy.

A pitch to a group of VC investors is one of the biggest steps in securing VC financing.  You have your proverbial foot in the door with your business plan, and they have called a meeting.  Now you need to seal the deal with your pitch.  No pressure, right?

Pitching is an art.  It is a sales talk without the “high-pressure” selling element. You simply need to tell your story clearly and effectively so that the VC investors believe that your company is worth their time.  Here are some tips on making an effective pitch:

1. Be Sure Everyone Is Introduced

Introductions should go all around.  In another post, we discuss how to introduce you and your team to the investors.  But be sure to also know who your investors are.  Remember them each by name if possible.

2. Use PowerPoint

When you are making your rehearsed pitch, use a PowerPoint slide method.  You may have to bring your own computer and projector.  However, the visual aspects of slides help the audience better understand your main points.  Make sure you incorporate a few tips about PowerPoint:

• Use fewer slides than you think is necessary.  Often entrepreneurs will create a presentation of 30 or 40 slides trying to cram every possible detail in their presentation.  Rather, only use about 10 slides.  That’s about as much as an audience can digest, and you don’t want to give your VC investors indigestion.

• Use big fonts.  Make sure your points are readable from a distance.

• Use only 3 or 4 points per slide.  Don’t cram too much information on each slide.  Each slide should cover a main topic and 3 or 4 sub-points.

• Don’t go overboard with slide template design.  It’s tempting to create visual and graphical masterpieces with your slide templates.  Keep them simple with easy backgrounds.

3. Build a Story

Using your PowerPoint slides, you need to build a story about your company.  Start with the company overview.  Then go on to address the problems and your innovative solutions.  Talk about the benefits and the advantages to your solution.  Then knock out the home run with how you plan to go to market with your business model and financial projections.

4. Connect With Your Audience

When you are giving your pitch, you want to connect with your audience.  Do this by keeping your story engaging.  As in the above point, building a story through problem and conflict, then presenting solutions and positive outcome, help keep your audience engaged.

5. Be Genuine

Don’t try to be a salesman or even a game show host with slick voice and insincere manner.  Be yourself and be enthusiastic.  No one is more passionate about your company than you.  Share that passion and enthusiasm in your pitch.

6. Be Brief

Here’s where some new entrepreneurs get it wrong.  They will prepare 30 or 40 slides and talk for and extended time about how great they are and how fabulous their business idea is.  Instead, keep your pitch to about 15 to 20 minutes.  It doesn’t need to be any longer to get the main points of your business proposal.  The VC investors will no doubt have questions and will want to use the rest of the time to answer these inquiries.   Make sure you are prepared to include Q&A within your pitch time. 

Venture capital members consistently note how frequently they are contacted by entrepreneurs looking to raise capital for their small or startup business, but are reticent to provide details about the business.  Why?  The main reason seems that some first-time and amateur entrepreneurs fear that their “big” business ideas will be stolen if they are not approved for the requested capital.

Not surprisingly, holding back on business details makes it very difficult for a VC to decide whether to invest in the business or not.  In order to make a well-informed decision to invest, a VC firm needs to know important details about the business to which they may transfer millions of dollars.  Therefore, it is extremely important for entrepreneurs like yourself to be ready to share information that is requested by a VC firm.

Rather than holding back your business secrets and proprietary information, it is wise to go ahead and share with VCs for a number of reasons:

A VC Firm’s Business is Making Money

VC firms are in the business of investing in businesses and making money, not stealing ideas and starting their own companies.  They are far too busy managing their current and future investments to be taking good ideas and making them their own.  They leave that to the entrepreneurs.

Venture Capitalists Are Privy to Many Ideas

Every week, venture capitalists are reviewing requests for capital investments from new and existing businesses.  That means they hear a great many new and innovative ideas that may not be on the market yet.  Venture capitalists know the importance of proprietary information and want to maintain their ethical reputation. 

Your Idea May Not Be All That Innovative

Believe it or not, many entrepreneurs believe their business idea is the best thing since the invention of the automobile.  In reality, their idea may lack real innovation to penetrate the market, or it may already be saturating the market by other businesses.

Giving to Receive Feedback

One of the biggest advantages to sharing your business information is that venture capital firms successfully invest in a great range of businesses.  They can offer much in the form of feedback on improving your idea(s) such as:

• Developing marketing and sales strategies
• Suggesting better business models
• Pointing out the key challenges based on experience
• Recommending potential partnerships

Venture capital is a great strategy that can help take your innovative business idea to great levels.  Don’t hesitate to share your business strategies, innovative ideas, and proprietary secrets to a VC firm who may be interested in lending you millions.

You have a great idea for a new business.  You have a business plan forming, and you foresee a great market need for your product or service.  All you need is start up money to transform your business idea from paper into a live business.

First, you should always have an accurate estimate of how much money you need.  Never think, “$20,000 should do it.”  You need to have a good plan on how you will spend that start-up money.  Do you need to rent an office?  Do you need to do additional market research?  Know how you plan to spend the money before you get it to ensure that you maximize your chances for success.    

With an accurate estimate in mind, you can then secure start-up money for your business – if you know where to look.  While you may not have access to millions of dollars to really jumpstart your new business, funds are available that can transform your idea into reality.  Here are five options you can use to secure quick start-up financing:

1. Your Own Money – Don’t always expect only others to finance your business ideas.  If you want others to invest in your business, you need to show them you believe in it too.  Put as much money you can afford toward your business venture.  Sell your stocks and bonds.  Liquidate large assets, or use a portion of your savings.  Keep in mind that another good reason to use your own money is that you get all the return.

2. Friends and Family – Don’t be afraid to ask your family and friends to invest in your business idea.  Show them that you are confident it will work.  Present a business plan with realistic goals and success figures.  Your loved ones will most likely be the ones who believe most in you.

3. A Partner – Not everyone goes it alone in the world of entrepreneurship.  See if you can find a partner with whom you can go into business.  Both of you can invest money, assets, time, and experience.  In addition, having help with all the legwork of starting a business can be a big help to your long-term success. 

4. Your Bank – Ask your bank for a personal loan.  If you are a long-time customer with good credit history, you should be able to obtain a loan or line of credit that can help your business get off the ground.

5. SBA – The Small Business Association guarantees millions of dollars in loans to small businesses.  These loans are financed through traditional banks, but with the help of the SBA guarantee, you can get adequate start-up financing.

If you are excited about your new business idea and wish to get it off the ground, start now to get the financing you need.  Make a plan.  Determine how much you need to get started.  Then go to the sources listed above and start selling yourself and your business to them. 

Are you approaching the right VCs with your business idea?  In the U.S. alone, there are thousands of VC firms and individuals who are ready to invest their capital in new businesses.  However, each VC has a particular industry or business focus for their investment funds.  You can save a lot of time by doing your homework and researching VC firms to know the right ones you should target.

Do It Yourself Research

If you have the time, you can find a number of online directories of venture capitalist firms.  If you do research on your own, be sure to only use the most recent directories.  You don’t want to find a great VC firm that has since closed shop or changed their investment focus.

Investment Firm Research

With the daunting number of VC firms existing in the U.S., it may be worth your while to hire an investment research firm.  These firms conduct research on venture capitalist firms and keep accurate, comprehensive, and up-to-date databases on which firms offer private investment funds to what types of businesses.  These research firms are relatively inexpensive and can save a great deal of time and money for you.  Pay by the inquiry or pay a small monthly or quarterly subscription for valuable data anytime.

Choose by Industry

What is your business industry?  Is your business idea in a technology manufacturing industry?  Or are you involved in a service industry focusing on investment advice to customers?  You will find that there are venture capitalist firms available for private equity funding for almost any industry, but you need to find the right one for your idea.  

Many VC firms will also focus their equity funding into very large businesses with the ultimate goal of incorporating and offering an IPO on the stock market.  On the other hand, some VCs will look at smaller to mid-size businesses that plan to remain privately owned.  Take a look at a venture capital firm’s preferences when choosing the ones with whom you want to market your plan. 

A well researched list of potential venture capitalists will help your new business find the best financing options available.  It saves time and money and allows your leadership team to focus marketing plans and presentation efforts to the venture capitalists most likely to take notice.