Whether yours is an early-stage startup, or a late-stage, at some point during your business, you will require money. A Venture Capitalist is someone who backs you with money, business expertise and can potentially bring in even more investors to back your idea make all your dreams come true. But, there are a few notable things that you must keep in mind should you decide to seek the help of an investor.
Here are the 5 Key Factors To Consider Before Approaching an Investor/Venture Capitalist
#1. Make Your Investor Wish-List:
During your research, you will come across many investors who would like to invest/have invested in an idea similar to yours. But, it is obvious you won’t approach them all, so pick your favorites and create a top 10 list of the investors you will approach. If #1 doesn’t work out, then you can move on to #2 and #3 and so forth.
#2. Choose your backer:
Once you are done creating your wish list, you must prepare a different pitch to give to each one of the backers on your list.
Good advice to follow before approaching someone for funding is to research them thoroughly. The more you can find out about the person you’re approaching, the better.
You have to know which investor is more likely to invest in an idea like yours, whether they have spent in such an idea before, and what are their requirements/expectations in general.
Getting to know your backers is a great first move as you won’t have to face a lot of surprises when you do get that big meeting.
#3. Share Your Strategy & Vision:
An investor would certainly like to know about your strategy and vision. Your vision may be outlined in your portfolio that you had sent across initially, but it doesn’t hurt to go through it again. Also, a strategy is something you must discuss in detail. Things such as, your realistic plans for the upcoming years, in which sectors will you require advancement, how will you survive the competition and finally, what’s your exit strategy?
#4. Get Rationale:
Your investor may ask some tough questions you must be able to answer, such as:
Why do you need the funding right now?
How will the funds be used?
How long will the investment be used for, & when might you possibly need it again?
What is the driving force behind the valuation of your company?
#5. Ensure Clean Credit History:
A good standing credit history is one of the most important aspects that allows you to have a sit down with your chosen investor.
Make sure your dues are paid on time and if you had a problem in the past, clear it up with your payees and get a report from one of the credit agencies of your country. When you submit the docket along with other documents, make sure to include your credit score and rating report as well.
Gathering funds from an investor/VC is a hard job, but being prepared does help to shed nervousness!