10 tips on raising investment from successful venture capitalists

They are the kingmakers of the modern world – the people that can decide whether or not the next (potentially) great technology or innovation becomes a reality, or remains a dream. Here are 10 tips on raising investment from successful venture capitalists.

FILL A GAP IN THE MARKET

Venture capital is predominately focused upon vibrant new technologies and businesses and by demonstrating that your company is providing a service or plugging a hole that no-one else has thought of, you make VCs stand up and take notice.

ENSURE THAT YOUR SALESMANSHIP IS AS GOOD AS YOUR PRODUCT

If the statistics are to be believed, only 5% of all entrepreneurs secure serious funding or investment. This doesn’t mean that only 5% of businesses are worth investing in – it means that 95% of entrepreneurs didn’t sell their ideas well enough.

SHOW ‘PROOF’ THAT YOUR IDEA WILL WORK

It’s impossible to predict the future, but that’s exactly what venture capitalists are trying to do. If you can some way prove – beyond reasonable doubt – that your venture can be successful then you make it very hard for investors to say no to you.

MAKE SURE THAT YOU’RE IN SYNC WITH YOUR PARTNER(S)

Many start-ups are not founded by individuals, but by a duo, a trio or a whole team. When just one person is responsible for the company – there are no arguments about direction, but when there are several viewpoints on where the company is headed this spells trouble for investors.

HAVE A PLAN B AND A PLAN C

Venture capitalists will love the optimism of any young entrepreneur and they will be enraptured by talk of what could happen to the company if all goes to plan. They also want to hear your plan b and a plan c – just in case everything doesn’t quite go to plan initially.

TARGET A LARGE MARKET

Show that you’re thinking big and targeting a potentially massive market and you’ll instantly appease VCs who want the biggest and most profitable markets to be investigated and targeted.

SHOW THAT YOU’VE GOT THE COMPETITION COVERED

Many entrepreneurs show hubris, assuming that they have cornered a part of the market that no-one else is targeting – and no-one else will target. Competition is quite simply part of business and you’ll need to demonstrate to VCs just how you plan to deal with it.

SHOW YOU CAN PRODUCE MAXIMUM RETURNS

Venture capital is big, big business and VCs are looking for companies that have the potential to grow to gargantuan sizes; the potential to be worth £50 or £100 million. These people aren’t interested in small beer, and you’d better be able to show that your company can be more than just a successful, but barely noticeable small business.

BE FLEXIBLE

Investment from venture capitalists requires flexibility on both sides and you should be prepared to make compromises on the direction of the company and the way in which it run. One or more of the board members may also be required to give up their seat as many VCs like to take a hands-on approach and monitor the company from within.

PRESENT A TEAM AS ABLE AS YOU ARE

All VCs will tell you that the quality of the management team goes a long way to determining their decision on whether or not to invest. If they see that a confident, capable. passionate team are in place they will (understandably) feel more secure about the long-term prospects of the business.