If you are reading this article, you have a business plan to raise capital or you want one. You need to have the outline of your plan on paper ready for investors to scan.
Ventures are challenged with raising venture capital. First you have to find the right firm. This may seem easy but it isn’t. There are thousands of these companies in the U.S. alone, and finding the wrong one is how companies crash when it comes to capital.
There are SIX main steps to consider: area, sector inclination, stage inclination, associates, collection and belongings.
Area: These firms invest within 100 miles of their office. By investing close, they can be more actively involved and add value to their portfolio companies.
Sector Inclination: Many firms focus on sectors like healthcare, information technology, wireless technologies and more. Even if your company is great, if you’re outside the sector they will pass.
Stage Inclination: VC’s focus on different stages of ventures. Some like the early stage with high risks and returns. Some like giving capital to firms to fill the gaps before going public.
Associates: These firms join individual associates who, in turn, make investment choices and sit on the portfolio’s board. They invest in things they know and finding one with experience in your industry is a plus. This will help them understand your venture's value proposition and give them the confidence to invest.
Collection: You need a company with experience and a firm with portfolio companies in your field. The management are industry experts and offer advice to VC’s about the company's worth. Synergies with the portfolio company will raise the VC’s interest.
Belongings: Most companies want a lot of capital when you are seeking venture capital initially. It helps if the VC has lots of money for following rounds. This saves time and effort in keeping an ample cash balance.
Finding the right firm is critical when looking for venture capital. The capital required and the assistance in the venture will bring about results. Remember, no capital means no growth.