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It always pays to do your homework and prepare if you think you can interest and qualify for venture capital. With the Recession, Venture Capital has shrunk 18% the first quarter of 2010, compared to 4th quarter of ’09. Some say that is good, others say that is bad. Either way, you need to understand if you have a fundable business model for Venture Capital, what VC is looking for in an opportunity, how to find VC and what VC investments are hot now. So here is a Venture Capital checklist for you to help steer you through the competitive market of venture capital.
The Venture Capital Checklist – Are You Ready for Funding?
- Have you considered using Business Turnaround Specialists to help develop your Business Plan?
- Is venture capital really the best option for your business model and finance needs? Will your company be fast Start Up, grow very big quickly, and have an Exit of a sale or IPO?
- Understand only 1 in 20 dependable deals get funded
- Has a VC funded entrepreneur critiqued your Marketing Plan?
- Is your Investment Overview short and derive interest in 30 seconds?
- Getting close to a venture capital firm can be tough. Utilize networks of advisors who work closely with the VC industry to get you introduced properly.
- Get close with a VC’s group of funds relationships
- Up to 50% of VC inquiries can come from cold contacts but highly recommend you find a referral source
- Find the VC inner networks. These people are trusted by VCs and are great referral sources. This includes previously funded entrepreneurs.
- Online research is a great way to find viable venture capital firms
- Find VC by using your personal networks and the social networks
- A venture capital attorney can be a great way to network your way into a VC relationship.
- Research the companies a particular VC firm has invested in
- Read very cautiously what the VC principals say and write and make that personal, informed connection when contacting them via email. Make it a personalized email!
- Keep the introduction email short: how much looking for, why you are a good fit to the fund, comment on the principal’s writings and speeches and make a personal connection. In other words, do your homework on the VC and keep your initial contact short and too the point but very personalized.
- Understand that the lead entrepreneur will be the one highly scrutinized. VC will closely look at knowledge, expertise, experience, track record and credibility.
- The entrepreneur has real Passion.
- Entrepreneur has vision
- The entrepreneur isn’t too optimistic about potential problems and threats
- Company has a great Team in place.
- The management team is more important than the business idea. A great team can be profitable with a mediocre idea. A great idea with a mediocre team fails.
- A website that already has lots of Organic traffic
- A Web Model that makes profit sense
- Understand online marketing well
- A Product or Service answer that will change the market or create a new market.
Some Current Hot Button VC Investment Areas: Wine, Food, Financial Services, Video Delivery, E-Business Infrastructure, Infrastructure around Cloud Computing, Media and Music. Solutions to save Consumers and Businesses money in this long Recession.
If you don’t qualify for Venture Capital, consider private investors. If you qualify for VC, use private investors to get you VC.
This article is written by Frank Goley, Marketing Consultant for ABC Business Consulting.
Related articles
- When should a startup not accept venture capital? (quora.com)
- VCs: Chill sets in on biotech as social networking gets hot (fiercebiotech.com)
- Insight Venture Partners Raises $2 Billion (dealbook.nytimes.com)
- Venture capital report: financing trends continue to improve (techflash.com)
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