Raising Venture Capital
Raising seed stage venture capital is one of the toughest challenges you can ever face. However, despite fierce competition, potential startups always somehow manage to find capital and reach a successful position. Over these years, I have seen many startups succeeding and many failing in their endeavour to raise capital. No wonder, there are certain aspects that many entrepreneurs fail to understand before their first meeting with a potential investor.
So if you are a first-time entrepreneur, here I am listing some very basic tips on how to raise capital from a VC for your startup. The points may seem very obvious but you will be amazed to know that most of the failed attempts are due to lack of one or more of these obvious aspects. So before you take your first attempt, make sure you have all the prerequisites with you that will enable you to convince a VC easily.
Quick Tips On How To Raise Capital
1. Know Your Requirements
What you want and how much you want should be very clear to you before you look into any other aspect. Unless you know about your requirements, you won’t be able to express your thoughts in front of an investor which will indicate lack of transparency on your part. If you don’t know what you are looking for, how will the investors know what they are investing for? Make a list of your requirements so that you can ask for the justified value for the first round of investment.
2. Create An Efficient Management Team
An efficient management team is the life of a company that executes all major operations ensuring smooth functioning of the company. Investors are, therefore, very particular about the quality of a team before investing. They usually look for a team that is smart, talented, committed, honest and expert in finance and management. The better the teamwork, the brighter the outcome, so make you manage to bring great talents under a single roof.
3. A Strong Value Proposition
Why would a customer pay for your product is the first critical question you have to answer so make sure you have something very impressing to say to the investors. If possible you can demonstrate a strong value proposition with the help of a group of beta customers from your target market. First come up with a working model of your product or service and then demonstrate why customers would come to buy that from you.
4. Proceed With The Right Attitude
Attitude is very important while dealing with capital raising. While wrong attitude can lead you to nowhere, right attitude can take you straight to your investors’ table. So try to maintain a pleasant and positive attitude and a great power to handle rejection. You never know when someone can introduce you to a potential investor so it is a must for you to be friendly with everyone in your network.
5. Choose Your Investor Carefully
Venture capitalists vary in their preferences; some invest in seed stage while other are interested in growth stage startups. Some invest in technology while some in energy or finance or maybe some other sector. Basically, you have to identify the right investor and then start chasing or it will all be a waste of time and energy.
These simple and basic things are highly effective in making a business look attractive. Remember, the eagerness with which you are looking for business capital is no less than the same with which investors are looking for investment opportunities. So if you can manage to offer them a lucrative investment opportunity, they will jump into it before you take it to some other investor. This means, there is no dearth of money in the market. All you need is the right set of things to raise it easily.
For more information on how to raise capital for your startup, feel free to visit Merger Alpha.