An effective way to receive the venture capital you need is by selling your business to venture capital (VC) firms. But of course, you should never approach those venture capitalists empty-handed. Keep in mind that venture capital firms will have to assess the viability of their business, first based on their business plan and secondly on their business pitch. More importantly, VCS is more likely to venture with you if they see these four important qualities in your business: disruptive technology, potential for rapid growth, a complete business model, and a high-performance management team.
Let’s say you’ve managed to meet those four rating criteria, your next task is to curate the negotiation process between your company and the venture capital firm. Present your business plan with more emphasis on the profit generation aspect. Also remember that venture capitalists would only give you that venture capital fund if you are going to share with them a slice of the pie, or a percentage of your equity. Therefore, you should be careful with the terms and conditions proposed by the venture capital firm, as they could affect your control over your business in the long term.
The CV rule is simple: if you accept our offer, you can have that venture capital fund. Your goal should also be simple: receive a good offer. And to achieve this, here are the important matters that you need to prepare for.
Write your business plan well.
Starting a business is difficult, but so is writing a business plan. All transactions, events, projections, assumptions and SWOT of your business, you should put them in writing in such a way that it convinces the venture capitalists of initial capital. Venture capitalists want their money to double, triple, or more in 3-7 years. Knowing this, you need to show in your financial projections that you can at least break even within the first year or two. The rest of your business plan is to show them that your business is worth investing in.
Justify your capital investment plan and your return on investment (ROI).
While these monetary matters are already covered in the business plan, venture capitalists will want to hear you state the same facts and figures in your ten-minute business speech. Expect detailed questions like “Why three years for that ROI, why not two?” or be prepared to give your best explanation when they tell you “What you are asking for is too much (or too little)”. If you want to receive that venture capital, you must be courageous in your financial bets.
Focus on growing your business so they can find you.
Venture capital is a great industry. Venture capital funds are raised by wealthy venture capital firms, companies, and private investors. Today, the main players in this market do not stop looking for new companies and small companies that can give them high returns. If they see that your business is selling at a high price, they will approach you with the venture capital funds. So the idea here is this: Make your business shine so VCs can easily find and endorse it.
Sell your business with confidence.
A true entrepreneur knows his business more than anyone. Whether you’re a startup or a company ready to launch its initial public offering next month, you can receive that venture capital if you sell your business with a high level of entrepreneurial skills. Once you’re in front of the VCs, consider it your first and last pitch. So do your best to get your best venture capital offer.
