Are there ways to get venture capital that make it easier to find the money you need?
Yes, there are.
Here are 9 secrets to getting that venture capital money.
1. Your business must be a full corporation that issues stock to stockholders who want to own it for future growth.
You can’t get venture capital as a sole proprietorship. Your business needs to be incorporated in one form or another.
2. You must be in a business having strong growth potentials in its market (even if that market is specialized).
Growth is the keyword for most — if not all! — venture capital.
That growth can come in three forms:
- Customer acquisition
- Marketshare
- Revenues
Venture capitalists are not interested in slow-growth industries and businesses. Look at all the contemporary examples: regardless of profitability, they invest based on how fast they are acquiring customers or gaining marketshare or growing revenues.
3. You must have access to a strong management team either on your staff or from outside contractors.
Getting venture capital is not a solo-preneur endeavour. It requires building a team — from a board of directors and advisors to the people who run and manage the business.
Most entrepreneurs discover that finding a business idea and starting the business are child’s play compared to building a world-class team.
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4 .Your product or service must have a great market demand in its field so that you can “grow the business” to produce profits.
Venture capitalists and aspiring entrepreneurs struggle to find what is called a product-market fit, which is finding that “certain something” that is a must-have for customers.
Some entrepreneurs go to market with what is called a MVP — a minimum viable product. This is a product or service that, as the name implies, is rudimentary as is, for the most part, a “proof of concept” to see how early-adapters will react. If the reviews are positive, then improvements follow; if not, then new ideas are explored.
5. You, and your staff, must be highly business-enthusiastic and this must show through to customers and investors.
Most entrepreneurs at this stage of the “game” are not merely shopkeepers and 9-to-5-ers. To get the venture capital money, entrepreneurs at this level must be
- focused
- passionate
- evangelical
- willing to work 90+ hours per week
Don’t expect one meeting and then getting the money you need.
Rather, prepare yourself to talk to hundreds, of not thousands, of people and to deliver hundreds of presentations.
6. You need a full business plan for your investors to project your future income, profits, and revenue growth over time.
You will need three important documents in order to snag venture capital.
- A business plan.
- An executive summary (part of your business plan)
- A pitch deck.
Frankly, most people will rarely read the business plan. That is mostly for you (and your board) to get your thoughts and ideas together in order for you to confidently build the business.
Every investor will want the next two items: the executive summary and the pitch deck. These show what the business does — the problem it addresses and the solution it provides — as well as introduces the people involved highlighting their qualifications and expertise.
Prepare these documents carefully and thoroughly because they are crucial to your success.
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7. You must be willing to listen to and take business advice.
We’re often treated to the notion that business people go against the grain and stand alone before the masses.
That’s not quite true.
The great business leaders find the best advisors and listen carefully and attentively.
Remember, you’re not going at this alone. You need to listen to the people who know more than you. That’s part of the reason for building a board of directors and advisors: they will guide you through the process as well as the tough times.
Always listen.
8. You must see your business as a profit machine, not as your personal possession and refuge from taking a job.
Your goal with gaining venture capital — or to build any respectable business, for that matter — is to build something bigger than yourself.
Yes, building a 7-figure business from a home office is great.
With venture capital, though, you’re going after larger game. This means that you’re going to have
- fellow founders
- advisors
- investors
- employees
- bankers
- accountants
- lawyers
It’s a much bigger picture — for a much bigger pie.
9. You must be willing to share easily some of your business ownership with your venture capitalist investor.
Let’s look at some of the richest people in the world and see how much of their business they actually own.
- Bill Gates: 1.3% (Yes, you’re reading that correctly: one-point-three percent.)
- Larry Ellison: 42.9%
- Mark Zuckerberg: 13.6%
In order to get the “big bucks” and become some of the richest people in the world, they had to “give” much of their share of the ownership of their business to angels, VCs, and investors.
It’s here that you will realize that adage: it is better to have 1% of a fortune rather than 100% of nothing.
Think about that.
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K-40 : The IWS Complete Business Plan Kit
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Big Money for Big Business
The biggest money goes to the biggest and most audacious ideas.
Venture capitalists and angel investors love nothing more than a tenacious upstart looking to, as they often say, “disrupt” an industry. You see this in action in recent memory in AirBnB, Facebook, Apple, and many others.
Keep the words of Napoleon Bonaparte in mind as you think of your business.
“What I am I owe to my strength of will, my character, application, and audacity.”
It might be that last one — audacity — that made Napoleon Napoleon.
Venture capital isn’t for everyone. For those who seek it — and dream about it — these nine secrets will guide you to cinching those funds and winning the game — big time.