It might seem easy, but the reality is that very few startups actually get financial support from venture capitalists. In Silicon Valley, for instance, only 0.3 percent – or one in every 300 startups – receives that highly sought after funding. This is the truth, and if you are one of these hopefuls, you might want to start improving your performance to ensure that you will be the chosen one.
This article does not focus on giving usual advices that urge you to be the top performer, the cream of the crop, and the best of the best – these are very obvious things that you should already be aware of. Instead, this piece will provide you with four important tips and reminders that might help you seal the deal with your potential founders.
TIP 1: Know What You Need
Before submitting a proposal to venture capitalists, it is your duty to know all the things that you are asking for from your potential founders. How much money do you need? Is the amount that you are asking for enough to support the startup? Where will you specifically allot the money that you will get? What will the VC get in exchange of the financial support that they will give you? What will be the status of your market outbound once you receive the funding?
These are just some of the things that you should be familiar with, and the list of questions goes on and on. As the owner of the startup, you should be able to answer every possible question that venture capitalists might ask about your proposal.
TIP 2: Know What You Are Doing
Impressing your potential investors is perhaps the most important things that you should do if you want to receive financial support from venture capitalists. And how can you impress them if you cannot clearly explain the concept, objectives and other significant details about your company? As the owner, you are expected to familiar not just with the strengths, but also weaknesses and challenges that your startup is facing. This will help you when you present your pitch before your potential founders.
TIP 3: Persistence is the Key
In this kind of game, time is usually not on the side of the entrepreneur. Venture capitalists have the power to act on your proposal on whatever speed that they like. They might decide to immediately discuss your pitch among themselves or hold it for as long they want due to any type of reason that they may come up with. There is nothing much that you can do at point – that is, unless you decide that you want to give them a deadline. This might work, but you must be sure that your proposal is good enough that your potential investors would bother following the timeframe that you imposed on them.
If you do not want this suggestion, then there’s nothing that you can do but to persevere in following up your proposal. Do not be ashamed to check the status of your pitch – there’s nothing wrong about that. Just make sure that you do not nag, pester or badger your potential funders.
TIP 4: Choose your Battles
Discussing the term sheet is a serious pain in the neck. Definitely, there will be disagreements on the terms and conditions that your investors would want to enforce. You should know when to hold your ground or give in to their requests. There’s no point arguing just for the sake of argument. It would lead to a disaster. Know how to choose your battles. Too much argument may lead to a bitter relationship between you and your investors. Or worse, you might end up losing an important deal.
Venture capitalists are not different from your friends, family, and business partners who have heard you talk about your startup. They are also people. And like the rest of us, they will listen to you as long as you provide them with honest and interesting information. You do not have to use out of this world statements to amaze them. All you have to do is to give them an honest proposal that is worthy of their attention.
More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.