Venture capital funding has become very popular with startups these days. The number of investors has grown, and they have become bolder, seeking high-risk/high-return opportunities in small to medium enterprises with amazing growth potential.
However, entrepreneurs need to have a strong blueprint ready as venture capitalists are being inundated with investment opportunities today. Here are a few simple things prospective venture capital financing seekers should keep in mind to grab hold of the perfect investment opportunity to give their business ideas a grand launch-
Meet-Venture capitalists get numerous invites for funding every day, and most of them come from cold-calling or emails. It is not the right idea as there is a high chance of your proposal drowning in the clutter. Entrepreneurs should try and set up a meeting, have a face-to-face conversation and seek feedback even if a deal does not go through. Remember, a single investor is a potential stepping stone to many more, and every entrepreneur will only benefit from better networking.
Identify priority-Venture capitalists have their own set of priorities, and entrepreneurs need to realize whether they fall in the same bracket. For instance, an investor might be looking to invest only in startups in software or renewable energy, or only in market-ready startups. The current funding situation, i.e. whether a company has conducted a seed-round, series A round etc. also matters. Entrepreneurs need to list with institutional investors and investment networks to connect with a group of investors to enhance their possibilities. A business that meets all the criteria of an investor can even negotiate better.
Be patient-From the first meeting to signing a deal, a venture capital funding process can take a lot of time. Entrepreneurs need to be very patient and help the investor in every way to carry out the venture funding proceedings thoroughly. Meetings followed by more meetings, presentations, individual discussion sessions and countless email exchanges, it might all seem a bit overwhelming, but with the bigger picture in mind, it will all seem worthwhile. Even negotiations regarding valuation take a lot of time, but the mantra should always be-It is all for the greater good. Have a strong elevator pitch and investor pitch deck-An entrepreneur should be immaculate in the documentation/statistics/presentation game.
Impressing investors within a few minutes can only lead to elaborate meetings, so the first impressions always count. The business should be clear in the minds of the entrepreneur-in terms of its prospects, short-term and long term vision. Most importantly, the investor should be able to see the potential to become a big brand, and the fundamental demand on which the business is based should exist for a long-term.
Initiate due diligence-The venture capital process involves a lot of checks and balances, and investors like entrepreneurs who have already done some part of the work, or know how to do it. From valuation checks, assets evaluation, financial statements etc. there are a number of processes which entrepreneurs can initiate firsthand to expedite the deal. This also helps to motivate the venture fund provider to accelerate things from their end and leaves a positive impression, which can be of great help in the future.