Raising venture capital isn’t easy. It takes a lot of blood, sweat, and tears to get your startup the funding it deserves. While there is no proven formula to guaranteeing you funding success, we at Seamgen have some tips for you to help you solidify that valuable VC funding.
1. VC Ready?
Whether it is your first time seeking Venture Capital funding or you are looking to enter your series C round, it is important to know if you are ready to make the leap.
For the most part, this decision is the hardest when it comes to your first round of VC funding. Once a startup accepts funding, it takes a pivotal step in becoming one step closer to becoming a giant corporation.
Venture Capital is about capturing the value between the startup phase and the public company phase.— Fred Wilson, venture capitalist
There is a lot that goes into the decision process. It’s important to ask yourself as the founder whether you are ready to expose someone else to your business. Most likely the VC firm will become members of your board that could have some power to dictate the company’s strategic direction.
2. Understand the Funding Process
Understanding the funding process is vital when it comes to selecting the right VC.
A great business model can fail if not careful when it comes to understanding the amount of funding they are looking for.
A $200 million fund is not likely to put a $40 million investment into a series A company. One needs to understand the VC funds size as well as how many other investments they are doing during that time when evaluating your options and how much funding one is looking for.
3. Do your Research
As you’ve been told since the first grade, do your homework. A great business idea does not guarantee funding. Research what other startups the firm is investing in and other particular methods of success when it comes to pitching to that particular firm.
Also it’s best if you can use your network to get a “warm” introduction. Whether you know someone at the firm or maybe it’s a friend of a friend, having that initial introduction shows a trusted connection. Most VCs do business primarily this way and it is your best chance of getting your foot in the door.
4. Treat it as a Business Development Opportunity
Don’t think this is just going to happen overnight. It’s a process. On average, it takes around 6–9 months to secure funding.
Don’t forget that you are selling two things: a business and yourself. Yes a working business is nice, but they want to see if you are something worth investing in. You have to create this sense of trust and belief over this 9 month period.
5. From the elevator pitch to the gritty details
Yes, the elevator pitch is important, but you have to know everything else as well. Knowledge is power.
If you come in with a theory and a plan and no data, and you’re 1 of the next 1,000, it’s going to be far far harder to raise money. — Marc Andreessen
You may have an amazing pitch deck, but you should be able to explain your entire company without it from the high level material to the weeds of the details.
6. Raising Venture Capital is like Dating
VCs want to get to know you. You may have a great business, but if they can’t trust you then it is not going to work out. At the end of the day, one of the venture capitalists across the table has to get excited enough about you to seal the deal.
Not only is it important that the VCs trust and like you, but it also has to be a mutual relationship.
It is just as important for you to trust and like the Venture Capital firm as well. Once funding is started, it is now a partnership as you both try to build something together.
7. Be Honest
You can’t build something on lies. Being honest with the VC firms can go a long way.
Don’t pretend that everything is sunshines and daisies. Every business has its flaws, and you owning up to those weaknesses is what VCs like to see. It helps them measure the strengths to make sure your business is a viable option they’d like to have.
Thanks for Reading!
Enjoyed this list of tips on raising venture capital? We have several more articles where that came from. Check out a few of our other, related posts below.