The sure-shot way to get Venture Capital
So, you have that great idea. Something that will change the world in a little or a big way. You've spoken to your family and friends and they all think it's a great idea. You spend countless hours researching for information and advice from websites and blogs on how to make a business plan that will interest your potential investors. You use one of those "send your pitch to 5000 VC's and angel investors" websites forking out 300 dollars for a "premium membership" waiting for that magical call to some in?
Now, let's get back to the real world!
A venture capitalist - or a VC, doesn't care about your idea. He cares whether you can build something that can sell and whether there are people who will buy it. Period.
Step 1: Look at your competition. Even something that you are doing which is radical and world changing will have a comparable - a service that offers something close to what you intend to offer. Check out websites like http://www.fundingpitch.com to get this information. How are they doing? Do they have customers? Can you get insider information into how they are doing (err - maybe pose as a press reporter looking for information ;-)
Step 2: Build a prototype - a working model that will demonstrate exactly what you want to create. The closer you can get to the "real stuff", the better it is. Your investors will love to "look and feel" something so that they can be interested in you and your idea. These days, with technology it's pretty easy to create demo working models quickly and cost effectively. Find a way to showcase your project.
Step 3: Get reviewed. If you know someone who is successful and well known, send out a short note asking if they would be kind enough to test and review your idea. Search your phonebook for journalists too. But remember - you don't want to send emails to people that you don't know. After all, your project is in stealth mode right? Want to know the best thing you can do? Try to get some people who can say that they are willing to buy your product or service.
Step 4: Get a team. At least, identify it. A venture capitalist will not just hand you out a personal check. You need to have a strong team which will take your project off the ground and to your customers. Key team members that a VC would like to see are: you (the founder & CEO), a marketing superstar and a technology geek. Ideally you should speak to these people, sell your idea to them and get them interested to be a part of your venture.
Step 5: Prepare your business plan. Investors will want to see that you have thought through all the possible aspects of your business and put them in. Be ready with all financials and back them up with your reasoning. If you say that you will be able to achieve $500 k in revenues in the first year - be ready to answer why you think so. What makes you think you will be able to acquire the customers that you are saying that you will? Hard question - but certainly one that you will be asked.
Step 6: Identify and target your VC's. Don't just send out your business plan to anyone and everyone. Again, websites like http://www.fundingpitch.com will help you identify companies that VC's are funding right now. Discover startups like yours, who funded them and how much did they manage to raise. Not only will this information help you identify VC's that are actively investing in startups like yours, but think about it - you can open your email to them with, "Congratulations on acquiring a stake in XYZ." Just something that'll make them feel good! :-)
Besides these steps, it's the strength of your idea, the market and your conviction in the business. Be passionate, but not amateurish. Remember, you're asking this investor to be a partner in your business - not your boss.
Good luck!
Now, let's get back to the real world!
A venture capitalist - or a VC, doesn't care about your idea. He cares whether you can build something that can sell and whether there are people who will buy it. Period.
Step 1: Look at your competition. Even something that you are doing which is radical and world changing will have a comparable - a service that offers something close to what you intend to offer. Check out websites like http://www.fundingpitch.com to get this information. How are they doing? Do they have customers? Can you get insider information into how they are doing (err - maybe pose as a press reporter looking for information ;-)
Step 2: Build a prototype - a working model that will demonstrate exactly what you want to create. The closer you can get to the "real stuff", the better it is. Your investors will love to "look and feel" something so that they can be interested in you and your idea. These days, with technology it's pretty easy to create demo working models quickly and cost effectively. Find a way to showcase your project.
Step 3: Get reviewed. If you know someone who is successful and well known, send out a short note asking if they would be kind enough to test and review your idea. Search your phonebook for journalists too. But remember - you don't want to send emails to people that you don't know. After all, your project is in stealth mode right? Want to know the best thing you can do? Try to get some people who can say that they are willing to buy your product or service.
Step 4: Get a team. At least, identify it. A venture capitalist will not just hand you out a personal check. You need to have a strong team which will take your project off the ground and to your customers. Key team members that a VC would like to see are: you (the founder & CEO), a marketing superstar and a technology geek. Ideally you should speak to these people, sell your idea to them and get them interested to be a part of your venture.
Step 5: Prepare your business plan. Investors will want to see that you have thought through all the possible aspects of your business and put them in. Be ready with all financials and back them up with your reasoning. If you say that you will be able to achieve $500 k in revenues in the first year - be ready to answer why you think so. What makes you think you will be able to acquire the customers that you are saying that you will? Hard question - but certainly one that you will be asked.
Step 6: Identify and target your VC's. Don't just send out your business plan to anyone and everyone. Again, websites like http://www.fundingpitch.com will help you identify companies that VC's are funding right now. Discover startups like yours, who funded them and how much did they manage to raise. Not only will this information help you identify VC's that are actively investing in startups like yours, but think about it - you can open your email to them with, "Congratulations on acquiring a stake in XYZ." Just something that'll make them feel good! :-)
Besides these steps, it's the strength of your idea, the market and your conviction in the business. Be passionate, but not amateurish. Remember, you're asking this investor to be a partner in your business - not your boss.
Good luck!
