How to Capture the Interest of a Venture Capitalist
There are many ways to secure funding for a fledgling business. Some entrepreneurs go the traditional route, utilizing a bank loan or even their savings. Other business leaders decide to seek outside investment, either from an individual angel investor or a venture capitalist (VC) firm.
There are pros and cons to harnessing the power of VC. On the plus side, it’s possible to secure a lot of money in one fell swoop, and you won’t need to repay the loan month over month. You’re also gaining a partner or a team of partners in your business who can offer guidance and a network. The trade-off is that you’ll have to give up a stake in your company, and VC backers often want to see a serious return on investment — which can add pressure to perform.
Want to know how to capture the interest of a venture capitalist? Keep these tips in mind.
Optimize Your Business Plan First
Before you so much as send an email, make sure your business plan is up to snuff — especially the executive summary, which busy potential investors will depend on to get a sense of how your company runs. According to the U.S. Small Business Administration, your executive summary should include:
- Mission statement
- Product/services offered
- The management team and staffing info
- Financial overview
- Plans for investment funds
The considerable upside to taking the time to fine-tune your business plan is that it will help you prepare ahead of your pitch. Many of the key sections found in your business plan — namely objectives, management structure, product info, unique selling proposition, and target audience — will be areas of interest the venture capitalist firm is sure to ask about in your meeting.
Perfect Your Pitch to Get a Meeting
Now that you’ve solidified your business plan and practiced your pitch, next you have to actually secure the meeting. Rest assured VC firms get lots of emails daily from hopeful entrepreneurs. So, what can you do to stand out? One start-up expert calls it your “headline” — the at-a-glance reason why a venture capitalist will decide to take your meeting. Examples include:
- Having a mentor or advisor on board who is well-known in your industry
- Getting the business of a notable client
- Securing funding from another credible investor or firm
- Winning an award at a conference or event
What all these scenarios have in common is that they help you prove that other experts have cosigned on your efforts — that you have proven yourself already and can do so again.
Tell Your Brand’s Unique Story
While all companies share some similarities, the most successful ones stand out. They have a story, a personality, a philosophy. VC firms will expect to get a sense of what makes your business unique — what sets it apart from the pack. This is where you’ll need to stay strong in your convictions about where your business has been and where it is going.
Avoid falling into the trap of trying to make your business widely appealing. Instead, zero in on the thing (or few things) your company prioritizes above all else. As one expert notes for Verizon, attempting to do everything is a mistake. Rather, you want to narrow your scope so you have a concrete vision to present to venture capitalists. This way, you’ll also be able to demonstrate specifically what you plan to do with the funds rather than making a general plea for funds
Attracting the interest of a venture capitalist involves preparing your plan and pitch ahead of time, reaching out in an attention-grabbing fashion, and emphasizing what makes your brand unique.
Thanks For Reading
More Read On Forbes Magazine