Venture Capital: Getting Your Foot in the Door

Posted by on December 18, 2009 in Business Financing, Business Start Up Advice [ 0 Comments ]

tting first round financing for your business has never been remotely easy, particularly if your business is still at the concept stage.  I’m in the trenches everyday assisting clients with deal structure, pitch preparation and investor negotiations. Successfully raising capital from equity investors is always based upon these key elements. Here are the “make it or break it” fundamentals business owners need to account for to get their foot in the door:

1.        A strong management and advisory team – The stronger your support team is, the more balanced your business idea will look.  There’s rarely a one man (or woman) show that can do and think of everything all at once while executing the business plan.  Being able to show that you have a seasoned group to help keep your business on the right track provides a layer of security for Venture Capitalists.

2.       A track record – For conceptual stage companies, you probably don’t have a revenue stream.  But you do need to show where you are and where you’ve been.  The more impressive the distance from where you started to your present stage where you are pitching investors, the more “sweat equity” you will have appeared to put into your business.  Venture Capital wants to invest in projects that you yourself have put time, money and effort into.

3.       Research/testing results– If you have a beta or test product/service, you need to prove that it has a market.  Investors want to know that if they pour their money into making something, there’s a definite market for it.  The age of “if you build it they will come” has passed.

The most important thing you can do as an entrepreneur is to be persistent.  Don’t give up at the first sign of rejection and take the feedback you receive from funding sources as gold.  They’ve taken their time to review your project and listen to your pitch, take their suggestions to heart.

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