It is very common for businesses – both start-up and small, established – to seek investors to provide capital. External investments are often sought after because securing business loans from banks can be a tedious and challenging process. Venture capital funding is a series of large investments and typically the hardest to achieve. But don’t get discouraged, your business may qualify for venture capital investing and it could be a great source to take your company to new heights.
If you are considering seeking venture capital investments, here are 7 tips to do your due diligence and ultimately snag your next big backing.
1.Know the difference and decide if VC is right for your business.
There are many investment options, and the titles of each can get confusing. Angel investments and funding from family and/or friends are separate from venture capital funding. VC equates to large sums of funding dispersed over a specific period, and the return on investment is important! Make sure to do your research before jumping into the process. The process can be long – it can take several months from initial inception to completion, so you want to confirm this is the right process for your business goals.
2.Do your research to find the right firms.
Clarify the types of investors you’re looking to for support and ensure they have a track record of investing in similar companies as yours. Identify a series of firms that catch your eye and, you guessed it, do even more research on them. You want to have a strong understanding of who you will potentially be working with, because there’s a possibility you will be sharing ownership of the company and working closely with the firm.
3.Get their attention.
Stand out from the next company who is also seeking investment. Treat each investor you seek out like a relationship and treat them with uniqueness. Try to avoid using template formats for the documents you share with them, and make sure what you prepare looks like you prepared it specifically for that firm – never send bulk emails or materials!
4.Work your connections.
VC investments are similar to any career – in addition to what you know, it’s who you know. Use several platforms such as LinkedIn to identify any connections you may have with the firms you are seeking out. Getting a personal introduction is not only flattering for yourself and business, but also a great way to get your foot in the door. Again, treat your connections with uniqueness and approach each firm one at a time (people know people, and people talk!)
5.Have your marketing materials ready.
When the time is right, make sure you’re ready. Have formalized documents prepared, as well as an awesome tag line for you to sell yourself. You will want to have an investor focused slide presentation and a business plan summary, at a minimum.
6.Sell yourself – prepare an amazing pitch.
Speaking of selling yourself, having a well-thought-out pitch and talking points prepared is vital, because you never know when your next impromptu conversation with a potential investor may be (unless you’ve scheduled meetings ahead, of course.) A website or digital version of your pitch is also a nice touch in today’s digital age.
7.Stay patient during the process.
Again, the process to secure venture capital funding can be long and daunting from inception to completion. But keep your spirits high and your patience even higher. Once you secure your funding, the real fun of begins…..working with your new investors to make your business take off!
Are you looking to secure your next investment for your next big idea? Stop by our website and see how we can help.