Raising venture capital is not a cakewalk. Ask an entrepreneur who has raised capital and he/she will tell you how the whole fund raising campaign is filled with challenges. Convincing a venture capitalist is not easy, so here are some valuable tips for raising capital. Basically, it is all about the right approach and attitude that will ultimately prove that your business is worth the fund that the VCs are looking to invest.
5 Tips For Raising Capital Decide What Exactly You Want
It means you have to understand your business first. Unless you know your requirements well, you will fumble while articulating your speech in front of the investors. And first impression is the last impression, so trust me, this might ruin everything. You cannot afford such blunders at this crucial stage so make sure you know what you want.
The most important deciding factor is the choice of the nature of business you are planning to run. Do you want a high-impact business which is sizable and scalable and is aimed to make people rich such as social media sites or the giant tech companies or you just want a simple venture-backed business where you can be your own boss. Know your preference before your approach the investors.
Create And Nurture Your Own Management Team
Your team is your most valuable asset and you have to provide it with the best possible facilities so that it can emerge as a strong, intelligent, smart and engaging team in front of the investors. Investors are always more inclined towards an efficient and smart working team as it ensures that the business will be able to create its own space in this highly competitive market. You have to provide your team with everything it requires to emerge as a topper and the most important is a mentor/ an advisor.
It’s A Game And You Need To Win
Often, the whole journey of capital raising and facing failures makes the entrepreneurs feel hopeless and bored. Make sure you don’t do the same thing with yourself. Treat the whole thing as a game where you are left in the field to face challenges and expected to emerge as a winner at the end. The basic idea is to keep you motivated all the time. Failure is not the end of everything. If you have failed, do not lose hope. Instead, work on your deal and see how you can make it better and more appealing to the investors.
Know the Market And The Lingo
Knowing your market is a must. You must be aware of the market trends and competition. Is the product or service you are offering in demand? Is it the best in the market? If yes, how? Who are your competitors? What strategy they are following? These are some of the vital points that will help you build a strong business strategy before you enter the market.
Also make sure you are aware of the various terminologies and concepts in venture capital investment such as a preferred stock or realistic business valuations, etc. Keeping in-pace with the trend helps an entrepreneur to easily appeal to the investors. You must also have a fair knowledge of finance and marketing as VCs usually give more preference to those entrepreneurs who have a clear idea of these two subjects.
Do A Research Before You Approach An Investor
There are certain things that you have to take care of while approaching a VC. Entrepreneurs often do the mistakes of calling the wrong investors, cold calling the investors or having the wrong attitude. Your way of approach is as critical as having a unique business idea. Never ever make a cold call to any investor; this is really disappointing. Simply sending a mail with a description of your business plan is of no use as it is quite an ineffective strategy compared to preparing yourself, making an appointment and then talking to the investors personally, face to face.
Recommendations works best so you must spread your network more to have at least one person in your circle who can recommend your name to a potential investor. Approaching the wrong investor is a total wastage of time, so that you must avoid that at any cost. Go through their websites carefully to know about their industry preference and stage preference before you approach them for fund raising,
These are some of the most crucial things that you have to take care of while raising venture capital. The first requirement, no doubt, is a unique business plan based on which you will plan to raise venture capital and then the above steps will come in to play to make sure that you successfully raise the capital for your venture. For more information or tips for capital raising, feel free to visit http://mergeralpha.com/