6 Tips On How To Raise Venture Capital

Raising Venture Capital

For a newly-started business, capital is the first and the biggest requirement. You can raise capital from various sources like your personal fund, your friends and relatives, incubators, angel investors or venture capitalists. Although banks and other financial institutions also offer loans but that chance is very low at seed stage as these investors pour money only on established companies. So if you are wondering how to raise capital for your startup that is enough to properly execute your business plan, the best source is venture capital.

Venture capital is one of the most powerful sources of capital that can take a business right from start to the stage of mergers and acquisitions, if only the idea is sellable enough. Below are some simple tips or, more correctly, the prerequisites to raise venture for your startup. Having all the below-mentioned things in the right place will go a long way in giving you easy access to a potential venture capitalist.

6 Tips On Raising Venture Capital

1.      Find A Unique Idea

Unique business ideas generally make it big and the success story of Flipkart is a perfect example of that. You don’t have to offer a completely new product or service to the target community - the trick is to offer an already existing product or service in a different way which is far more appealing. If you can do that, investors will, rather, start chasing you! 

2.      Target A Sizeable Market

Market traction is an important consideration while raising capital. Targeting a bigger community means more people will know about your business which will result into higher sales. You have to be able to demonstrate the market traction through a group of beta customers and a prototype of the product. 

3.      Arrange A Smart And Efficient Team

A team is the next biggest asset for a company after capital. If you can arrange a team of smart, knowledgeable, honest, committed and efficient members, nothing can stop you from achieving your goals.  Venture capitalists rely more on the team than on the founder so make sure you have a one that you can proudly show to your investors. 

4.      Determine The Value Of Your Business

Business valuable means determining the exact worth of your business considering its tangible and intangible assets like the product/service, the team, customers, equipment, etc. This not only comes handy during merger and acquisitions but also helps you determine how much you can ask for from the investors. Business valuation is a complex and time-taking process so you can always hire a financial advisor for assistance and perfection. 

5.      Target The Right Investor

Make sure you are chasing the right investor or else it will all be a waste of time, energy and money. Not all investors will show interest in your business. Only those with interest in your industry type and the stage of development of your startup will invest in your business. Different VCs invest across different sectors like Technology, Energy, Telecommunication, Finance, etc. They may invest anywhere from seed stage to later stage development. So you have to first find your potential investors and then start chasing them. 

6.      A Compelling Story Backed By Data

Preparing a compelling pitch is very important before you knock your investors’ door. Storytelling is a very cool and interesting way to convey your message to the other side of the table and it would be a cherry on the cake if you can prove your statements with data. Investors love to see data so try to provide them this element to prove your business’s actual worth. 

Conclusion

Along with all the above elements, you also need to maintain the right attitude. How to introduce yourself to the investors, how to talk, how to convince them, how to deal with rejection, etc. are some very important things that you will get to experience during your venture capital raising campaign. Even if you fail at the first few attempts, you can always be happy thinking that whatever mistakes you have done so far have taught you something new. So each time you approach a new investor, you know that you are better than your last time.

So go ahead and turn your dreams into reality and once you successfully raise capital for your startup, do share your experiences with us in the comment box given below.

For more information on how to raise capital, feel free to visit Merger Alpha.

Good luck!