Venture capital can help a business boost market reach and begin the journey from start-up to SME to corporate and beyond. Capital raising is a crucial step in the business journey then, but it’s also a complicated one. With a good product, team, and pitch however, any startup can access venture capital.
So, what makes for a successful funding pitch, and should businesses do if they’re successful in raising capital?
One of the most important things to do when aiming to raise venture capital is to research everything, and then research it again. CEOs boost their chances to raise venture capital when they understand: the market they’re in; the investors they want to pitch to; the audience for their product and the long-term plan for their company
With research, startup founders can prove to investors that they have a good grasp on the business they run, as well as the market they’re in. This increases their chances of securing venture capital, as it demonstrates that an entrepreneur knows how to generate a return on the investment.
But research isn’t just meant for the pitch itself.
Entrepreneurs should dedicate time to research the investors, VC funds, or business angels they want to contact. If funding comes with little market knowledge, expertise, or networking, it’s not likely to lead to much. The right investor brings more than just financial value to an investment.
If startups raise venture capital from investors that can support the business with valuable consultancy, and important contacts, it can accelerate growth. Only with research can entrepreneurs find the investors that truly help them scale.
Besides a good grasp of their business and market, entrepreneurs also need a strong foundation to show to investors. This includes: a well thought out business plan and strategy for growth; a dedicated team of talented people; a valuable product, preferably after it already went to market and a good story.
Investors are people too, and if entrepreneurs can pitch a good story about the startup, and its future, they’re at an advantage when trying to raise venture capital.
Good ideas and grand objectives won’t take startups to the next level. They’re a core part of startup culture, and they’re important to stay motivated. But for raising venture capital, being grounded in reality is even more important. Anybody can come up with a revolutionizing idea, but to secure a first round of investments, execution is more important. When entrepreneurs can point to their team, their product, their marketing – anything they have to show for their effort – and the effort is self-evident, investors are more likely to consider funding that startup.
A Plan For The Future
Venture capital is meant for startups that have a long term plan. VC funds aren’t looking for a quick turnaround of 0.5%. They’re in it for the long run, so they’ll be looking closely at the plans for the future of startups that contact them.
A good business plan needs to be thorough, and entrepreneurs should be ready to answer questions and deal with the detail on financial predictions, what funds will be used for, growth plans and competitor analysis.
In general, startup owners looking to secure VC funds should paint as clear of a picture as possible about the future of their market, and business. If this picture is based on real numbers and data, the chances of raising venture capital grow.
Funds Secured: What Next?
The time after a successful round of funding is exciting.
While celebration is in order, entrepreneurs that have gone through a successful round of funding still have a lot of work to do. When an investor pledges their funds to a startup, it’s not just about money. It’s a seal of approval, and a lot of trust invested in an entrepreneur. Understanding the responsibility that comes with an investment is the first (very crucial) step entrepreneurs need to take when securing funds.
Up next, the right course of action will depend on a case by case basis. Sticking to the plan outlined while pitching is of course important, as it will guarantee success for a startup, and satisfaction for investors.
But going further than that, adaptability is also key. A plan might not always work out in exactly the same fashion it was laid out on paper.
Lastly, good investors will not just throw money at a startup and expect a ROI a few years down the line. Good investors will get involved in a startup’s progress, and help out with what they can. Entrepreneurs who have secured VC funds should gladly accept advice from their investors.
Raising venture capital is a lengthy process. But it can be done efficiently if the entrepreneurs aiming to raise funds do their research, have a strong foundation, a good plan for the future, and they match with the right investors.