About Venture Capital and The Process of Raising It

Venture Capital offers one opportunity for you to secure the funding you need. This guide will help you understand the steps to success and the important things to consider during in your strategy.

Preparing To Efficiently Raise Venture Capital

1. Look for the individual rather than the company 

It can often be worth researching individuals at VC firms prior to approaching them for investment. Within companies, investors can vary greatly, and they may have different criteria compared to their co-workers. Try and identify those that will be most receptive to your business idea and model by looking at their previous investments.

2. Approach online 

 Once you have identified them, get ready to meet them online. You may already be following or connected to their channels through your initial research, and through this, you know what their interests and focusses are. Consider sending them an article or lead that might be relevant to them, comment on their social media posts and retweet their tweets. Done properly, they will notice you, and they will appreciate the attention. As long as it is done professionally and not excessively, you will begin to build up a rapport. Considering that your business contacts will likely overlap with their own industry focus, you could suggest an introduction to one of their portfolio companies and a potential customer you may know. This is a great way to build trust and connections with VCs.

3. Develop your business plan

Your business plan is integral in demonstrating your company’s potential for growth. The more fleshed out and detailed your business model is, the easier investors will understand how they will get a return. Your business plan should be comprehensive, but at a minimum will include a business brief, value proposition, business model, market opportunity, competitor analysis and information about your executive team. Make sure you go into detail, but also ensure it is presented in a clear way your investor can grasp.

4. Make sure your timing is right

Once you have everything in place, timing your approaches is key. Ultimately, any investment decision is a massive test of trust. As a result, you have to de-risk your company as much as possible to convince any investor to take part in your round. However, most start-ups are losing money at these stages, and it takes a huge balancing act to decide when to go and when to wait. You should ideally look to be pitching when you have enough capital to actually run a successful fundraising process, as investors will be put off if it seems like you need the money.

5. Begin Pitching

It is important to note that VC firms have processes that are followed when it comes to pitching. Most funds approve funding via partner meetings, which are usually at the start of the week and can be half a day or a full day long. Your goal is to get to that partner meeting and secure investment. The length of time and number of meetings depends on what funding stage you are at, however for seed rounds the process may be two or three meetings, followed by a presentation at the partner meeting before ultimate approval.

Most Common Questions Investors Ask When Trying To Raise Venture Capital

Do you know anyone who has been through this already? 

If the answer to this question is yes, then speak to them constantly about their experience and get their advice about how to approach investors and prepare your funding round.

How will you use the money? 

You must make sure you have a plan for deploying your capital in value-creating ways. By setting goals that are capital-dependent, you can demonstrate in your investor pitch exactly why you need the funding and where it is going. Investors will know a lot about your industry, and if they don’t think you need as much as you are asking for, they may be turned off from getting involved.

Are you ready to cede some control over your company? 

One of the by-products of accepting outside funding (especially when it comes to crowdfunding) is that it means ceding some control of your business to someone else. For some founders, this is a bitter pill to swallow, as many start their own businesses because they want freedom. However, this is necessary if you want your company to grow and bring success. If this is a sticking point, it is worth considering the benefits this can bring. Your investors are seasoned professionals with a huge amount of experience in successful ventures. You should be willing to listen and learn from them, taking on board their advice, rather than rejecting it.

Is your team ready?

Any VC will be looking beyond your product and your ability to pitch it. They will want to know about your executive team and its preparedness to take the company forward. You need to be able to sell all of your team’s attributes, strengths and achievements. If it looks young and inexperienced, think about recruiting someone who can add authority to your business, or at least demonstrate how your new funding will allow doing this.

Are you fully prepared for your pitch?

While your business plan may be fully formed and informative, it is important that you can condense this down into a 30 – 60-minute pitch. This pitch should showcase the best aspects of your business, going into enough detail to show intelligence and knowledge, but keep the investor interested in your passion. On your slides, only show information that is relevant to your presentation.

How We Can Help You

Challenge Advisory has helped hundreds of startups by giving tips for raising series A funding capital and helping to secure funding in many sectors. Some of them include Robotics, Blockchain, Energy, Agriculture and more. By providing guidance and expert advice to early stage companies who have the desire to grow but are struggling to find investors who would be interested in their vision, we have helped raise over 390M+ in capital and counting.