So you have a great product idea you’re sure would sell. And, you’ve managed to kickstart it as a business, or maybe not. The thing is, you need money to fund and scale up the idea or business, and you’re considering loans and investors. But, how do you convince people to fund your startup idea or business? In this article, we’ll explore how to get venture capital funding for your startup and everything else you need to know.
What is Venture Capital Funding?
Venture capital funding is funding provided by venture capital firms to high-risk, high-potential startup companies. The funds come in three forms to serve whatever purpose an entrepreneur desires. It could come in as seed funding to fund companies from scratch, or as expansion capital to help a company expand, or as a buyout capital to enable a company to buy another company with huge profit potentials.
Venture capitalists (VCs) fund startups in exchange for a percentage of shares in the company. Basically, a venture capitalist will provide you with the money to start or expand your business idea, for a chance to share in the potential profit you may earn. Sounds like a win-win, right? Well, it usually is. But, before you dive in to get venture capital funding for your startup, you should understand the pros and cons.
Reasons To Get Venture Capital Funding For Your Startup
Venture capital funding offers several benefits that are reasons enough to get one for your startup. You can raise large amounts of capital funding, from hundreds to millions of dollars, quickly. And, unlike bank loans that have strict requirements to qualify to apply, all you need to apply for capital funding is a viable business idea or a profitable startup.
Also, you won’t need to make monthly payments or use your personal assets as collateral. Furthermore, you can leverage the venture capital firm’s resources, such as their connections and expertise, to grow your startup and manage risks of failure.
What To Consider Before Getting Venture Capital Funding
Venture capital funding, like any other type of funding, comes with strings. So, while the benefits are great, you must consider the cons of venture capital funding too. The main disadvantage is that you would no longer have full control of your business. Depending on how much funding you need, you may even lose majority ownership.
This means that the venture capitalist would be heavily involved in the decision-making process. And, when the capitalist goals or ideas don’t align with yours, especially profit-wise, it can cause conflict that may lead to you losing your business.
6 Tips to Help You Get Venture Capital Funding
Venture capitalists are investors with years of experience to boot. Given the nature of their jobs, they meet hundreds of entrepreneurs seeking funding weekly. In their line of work, they hear the craziest ideas, and since a lot of money is involved, they must filter out many of these entrepreneurs or risk losing a lot of money.
Hence, the selection process for a venture capital fund is a tough one, which many entrepreneurs dread. Nevertheless, despite how tough getting a venture capital fund can be, it is not an impossible feat. Continue reading to learn some tips that will help you secure venture capital funding for your business.
- Create Credibility With Your Network
You should have a physical and online network that trusts your work and engage with it. Many VCs lookout for startup businesses or ideas with some sort of clout. And, the more clout your startup has, particularly online, the more VCs will be looking to invest in it. One way to start building an online presence that can attract potential VCs is by leveraging LinkedIn. Every serious-minded startup must have a LinkedIn profile where they share bits of their ideas or startup journey and engage professionals in their field.
- Opt for In-Person Visits With VCs
Having identified potential VCs who’d possibly be interested in your company, it is best to meet them in person. Personal visits are a lot warmer than online meetings, which more people opt for. Meeting interested VCs in person would usually require you to set up appointments and maybe extra cost in transportation to their cities. However, you could cut through these hurdles by attending physical events where you are likely to meet these VCs and strike up conversations.
- Craft a Captivating Pitch Deck
Crafting the perfect pitch deck is almost 50% of the venture capital funding work. VCs are busy people, and so, the more compelling your pitch, the better chances of having them consider your business. Your pitch deck should be short, informative, and compelling. The best approach is to refine your business idea until you can sell it in a few clear sentences. Your pitch deck should carry the very essence of your business and where you hope to drive it.
- Work on Your Business Presentation
Work on your business presentation till it is foolproof. Remember, you are presenting your business to a team of people with a wealth of experience that you possibly can’t contend with. Make your presentation detailed, and answer all questions as clearly as possible. Ensure you include essential things like your vision and value propositions.
- Focus on the Numbers
Again, remember VCs want to invest and make a return on their investments. So, ensure you focus on what they would be getting. What are your financial projections over the next year or five years? How much is in it for them? Make your data presentation in simple, understandable charts. But, don’t be afraid to play with colors and be creative when designing your charts.
- Exude Confidence
Your traits and charisma could be what completes your good luck charm to help seal the deal. Understand your business idea inside out to avoid stuttering when pitching it. Practice, practice your presentation over and over again. Then, go on to show them you are worth your salt and what they will be missing out on if they pass up the chance to fund your startup.
No doubt, funding is one of the biggest challenges most startup entrepreneurs face. But with venture capitalist funding, you can get your startup running at full scale. However, investors, and people generally, hate to lose money. So, your startup idea or business must stand out to get venture capital funding quickly.
If you need help landing venture capital funding for your startup, you can reach out to us at Draidel. We will help you turn your ideas into projects that will interest venture capitalists, and give you all the support you need to secure the capital funding.