What does it take to attract a VC to your Company/Idea?

A couple years back I worked with Venture Capitalists in the high tech space. I wrote this article after observing so many companies and people trying their best to attract and secure venture funding for their company or idea.

While this article doesn't address recruiting specifically [my chosen passion] it in a big picture manner of speaking can be very relevant to recruiting.

Where there is money invested, recruiting is sure to follow....

How do you attract and convince a venture capitalist (VC) to invest in your idea? {LUCK, plain ol’ LUCK!}

Author: Brenda DePas 6-10-05

It’s an art as much as it is a science as it is a game of chance. Below are some key points that may be of help for those in the pursuit of venture dollars:

· Networking. You know someone who knows someone – who knows the VC. VCs have their own network of people they trust, know and take leads from. If you can crack into this sphere you are one step closer. {I haven’t met a business plan submitted without intros get invested in yet…}

· Assessment. You need to assess how to best position your venture and funding needs. What kind of venture has the best chances of getting funded is an important question to have an answer to before you proceed. {This is not an easy one, but I never promised easy}

· Avoidance. Avoid the quick one liner and sales pitches. At the end of the day, investors want to know how they make money by investing in you and your plan. {But not at the first shake of the hand, get contact info and set up an appointment}

· Readiness. Be prepared. Give the investor what he/she needs to make a quick go no go decision. If it requires a lot of work on their part to get to an initial decision, they won't get to it quickly – if at all. {VC’s don’t do homework until after you sell them on the idea}

· Timing. This is key. At first meeting, you have to peak interest in the first 15-20 seconds and have them sold in 90-120 seconds. The real dialogue begins when you get the investor to believe in the opportunity. {Crafting this strategy is going to be your key important factor to success if you get in front of a receptive VC}

· Art. Paint a vivid and clear picture that speaks to the investibility of what you are proposing to do, where you want to go and how you will make money for the investors. {This needs to be crafted before and practiced so much it looks unrehearsed}

· Passion. Be passionate about your idea, your plan. If you aren’t, don’t expect them to be either. {Don’t fling your arms or spit when you convey your passion though… do I need to say more?}

· Negotiation. You will get what you negotiate. The deal is going to be as good as your negotiating skills. {Fact – A well respected VC once told me children are the best when it comes to negotiators}

· Agenda. What’s your agenda? The investor’s agenda is fairly clear – make money. In the business of venture funding there is always an agenda. Make sure you know what yours is. {Handshakes are no longer good – you need signatures on dotted lines}

· Smaller is better. For the first meeting with an investor, have an executive summary or condensed version of your business plan. If there is interest, the more detailed plan will follow. {Executive Summary 2 pages, Mini plan 10 pages. Focus on the concept, market, got to market strategy}

· Investor pitch. Along with the exec summary and/or mini plan, have an investor pitch prepared. Leaving them with a hard copy version is not necessary unless they ask for one. Most likely if you give them one, it will get dumped. {What’s investor pitch? Get help if you have to ask, there are good consultants that specialize in this very subject, Get a referral for one}

· Why Invest In Me? Investors are not only investing in your idea but in you and your team. You need to be clear as to the value proposition the team / you bring to the table; eg a team that has the combined skills and track record of success able to execute on the business model and deliver the milestones after funding. {It is possible to build a dream team prior to the investment with little financial outlay, but you have to call me if you want to find out how…}

· Differentiators. If it’s “disruptive” - think Bill Gates… tough act to follow but think uniqueness. Investors shy away from “me too” products / ideas. Be clear on how your idea is different and how the market will run to buy your product. {This requires REAL MARKET RESEARCH; yes you have to do it}

· Due diligence. Just as the investor is checking you out, you should check out the investor. It is not all about the money. Does this investor add value beyond equity to my company? Do they understand my market, can they help me? {It’s going to cost a piece of your company so make sure you are happy with who is getting a piece}

· Spend money to get money. Be ready to spend time and money touring the investor circuit. AND do not visit any one and everyone that’s an investor. Remember VCs talk to each other and if you get rejected this info gets passed along. {It’s a small world after all…}

· Key data points to address. When you meet the VC face to face have the answers to these 9 key points and cut the rest of the fluff in half.