You are looking for venture capital (VC) funding, but what exactly venture capitalists look for in an investment? Before that, know that venture capital is different from angel investors in more ways than one. What makes the two different is that while venture capitals want the same things that angel investors want, theirs are bigger and better. On that note, here are the top 5 things you must have before you seek VC funding.
Unique and Uneasily Replicated Ideas
Venture capitalists are looking for high returns in exchange for high risks. In order to justify those risks, you must be able to offer them a business venture that’s unique, fresh and can fill any void there is in the marketplace. The ideal ventures are the kind of technology or service that can be trademarked. Since the Internet, anybody can sell anything online but you must be able to provide the kind of products that are yet to be developed – something that’s innovative, readily available and low cost to capture the attention of venture capitalists.
Real Possibilities for Huge Growth
Before you go on looking for venture capitals, you have to be sure first that your startup shows real possibilities of a huge growth. It’s important that you have a strong management team and that your business venture is capable of scaling up high volumes of sale and fast. The key to that will that unique and innovative idea that will defend it from the strong competition in the market. If you are able to show that you are capable of these things, then it’s the right time for you to seek VC funding.
Compelling Startup Pitch
When seeking for venture capital, one of the most important things that you must prepare is the startup pitch. If you want to get to invest, you must develop a really compelling startup pitch bearing in mind that venture capitalists are experts in a startup. Your goal in the startup pitch is to show the venture capitalists that your business is different and that you’re better than your competitors. This is often overlooked by first-time entrepreneurs but is something you must have before you ever try looking for investors.
Perfect Team for the Job
Apart from having a compelling the proposition to really interest your investors, a very important factor is for you to have assembled the perfect team to back you up. It is attractive to investors if you already have the right people that can make your proposition a reality. This shows that you are already one step ahead in the competition and it gives the VCs conviction in your business venture.
Last but not the least, one thing that you must already have before you start seeking VC funding is proof that your project has relevance to the market. Before VCs would write a check to you, they want to be sure that there is a sizable market to venture. On that note, you must be able to demonstrate through beta customers, that you can convert a pilot customer to a paying client.