90% of startups fail.
With startups, failure can be blamed on many things; lack of adequate financing is a major factor here.
Venture capital can make all the difference.
But how can you access it? Here is our expert guide on how to get venture capital.
1. Figure Out If This Is the Best Option
Venture capitalists focus very little on linear growth and more on recouping their investment several times over.
This means you will be pressured into taking the actions and decisions that will spike growth at this rate.
Not all companies are build or are in a market that can follow such growth plans. If yours is one of these, then venture capital is unlikely to be your best financing option.
It would help if you also thought about your vision and how much of it you are willing to yield in lieu of funding.
2. Think About Your Introduction
Venture investors tend to run in close-knit circles. You are likely to get heard if you are introduced from a member of this circle, then by an outsider.
The circle includes other investors and founders, incubators and startup accelerators as well as fundraising consultants.
Here, is where your networking will pay off as you seek to get connects that will get you a meeting with venture capitalists.
Of course, getting an introduction is not a guarantee of funding, but it at least gets your foot in the door.
3. Prepare an Excellent Pitch Deck
A pitch deck is an executive summary contained in no more than 20 PowerPoint slides.
For you, this is your primary resource to get you invited for a meeting or subsequent discussions, much like a resume gets you a job interview.
One way to get your pitch tossed is by sending generic pitching templates to numerous venture capitalists.
Customize each pitch with each venture firm in mind. This forces you to do some research into the company and the startup’s they normally back.
If your pitch is unsolicited, this step becomes all the more important.
4. Draw Attention to Your Idea
As you can imagine, venture capitalists get numerous pitches each day. This means you have to do things differently to get their attention.
This requires you to showcase why you are different and why it’s in their best interest to back your venture.
This could be anything from a recently won award, a huge tender you just won or even creating a buzz among the who is who in the industry.
5. Bring You’re A-game to Meetings
When you do get an audience with venture capital firms, bring your A game.
However, while it’s one thing to be confident and passionate about your idea, it's a whole other thing to be cocky at the meeting.
Find a way to communicate your enthusiasm professionally.
Also, as good as your idea is, the people your meeting with are human like the rest of us. For this reason, they will gravitate towards some personalities and not others.
Allow the best parts of your personality to come through, be professional, yet personable and engaging in order to create a rapport.
Still, your personality will not trump content, which brings us to our next point.
6. Know Your Stuff
This goes for both your business, your competition, and your audience. A perfect pitch to a firm that doesn’t back your line of business lowers your odds of getting financing.
The same goes for an idea with too many uncertainties and information gaps.
When you do get an opportunity to pitch your idea, you have to go into overdrive.
Learn your business backward, find and straighten out any kinks and even have mock pitches with friends in the business world. The mock pitch can bring up questions or issues you had overlooked and you can work these out.
It is important to acknowledge that you have competition and highlight how your idea is different, and how you intend to beat the competition.
Think through your marketing plan as well, so that you are able to spell out exactly how you will use the funds to bring more customers on board.
Look into other venture-funded startups and see how their business model and business idea pans out.
7. How to Get Venture Capital: Keep Them Interested
Getting venture capital is not an overnight event. There will be months of vetting and due diligence.
Your pitch must have been enticing enough to get a follow-up meeting. However, the material from the first pitch won’t be as exciting in subsequent discussions.
Keep working, polishing and puffing your idea and creating a buzz around it. If your startup starts losing its luster, your chances of getting funding will shrink as well.
8. Do Not Make False Statements
Granted, getting funding might be the only barrier between yourself and a lucrative business venture that could change your life.
However, do not allow your drive to cheat you out of a possible deal. Any and all information presented must be accurate and verifiable by facts. This goes from your customer base to your financials.
While some of these might be projections at this point, try and give conservative estimates.
The final step in getting funding will involve the venture capital firm doing its due diligence. Being caught up in a lie is just about the quickest way to kill your deal.
9. Have an Endpoint in Mind
You cannot court financiers indefinitely.
Find feasible reasons to impose deadlines on when the venture firms you’re talking to should give you their final decision.
The longer the process is drawn out, the more you lose traction and momentum.
Your business might also suffer from your divided attention, making funding harder to find the second time around.
Your goal is to strike while the iron is hot.
Secure Venture Capital for Your Startup
Our final word on how to get venture capital funding is to simply go for it. This might work out for you to find financing, or it might not, but you only find out after giving it your best efforts.
While you wait for funding to kick in, your business must remain afloat. Check out our blog for some practical strategies on how to run your business on a tight budget.