Companies such as AirBnB, Seamless,
and Uber have dramatically reshaped our economy as they
made life unprecedentedly more convenient.
Unfortunately, innovation often
comes with a hefty price tag, which is
why many of today’s most exciting startups have turned to venture
capital to fund their businesses. Image source: www.thedailybeast.com
But where large sums of money are involved, politics inevitably follow.
Here is a quick guide to what you need to know to push past them and seal the
deal: Image source: www.cbinsights.com
This is because venture capitalists are not about small
loans.
They seek to invest multi-millions of dollars in exchange for returns
that are even bigger.
Therefore, companies seeking
somewhere between $10,000 and $100,000
should look for angel investors, who
like to contribute smaller sums. Image source: money.cnn.com
Companies that need more than $100,000 but
less than $1 million should consider
attracting micro-VCs, investment funds of
between $10 million and $50 million who are more likely to make
smaller contributions.
The best politicians are surrounded by dozens of advisors who refine everything from the
clothes they wear to the words they say.
The same is true of companies.
Prior to reaching out for venture funding, attend a conference in which you can pitch your ideas to a panel that will critique them to give you valuable
feedback about the things you’re doing well and the things you should improve
to make your organization more attractive for venture funders.
Seasoned leaders will help venture capitalists feel confident in the ability and stability of your
company.
Venture capitalists also look for leaders who display tenacity, drive, flexibility, and
knowledge.
Politics is a lot like dating.
For example, the qualities of being polite, presenting a compelling persona, and just generally putting the
best foot forward may help you secure a second-look (or second date) from a
major venture capital fund.
However, getting the first date—the
venture capital firm’s first look at your company—
often takes the right setup or
recommendation.
Also, remember that venture capitalists take a
lot of time to consider their investments even after a
successful introduction, so be prepared to “wine and
dine” as necessary by providing required
information and finding the best way to sell your
vision.
Of course, professionalism and a solid business plan are important to securing a
venture capital investment, but venture capitalists also want to work with companies that run on passion.
You are not just asking for money to grow a business, but for an investment in your
vision for the future.
If you liked this piece, visit: LarryScheinfeld.net
Larry Scheinfeld is a co-founder and partner of Zelkova Ventures. Before working at Zelkova, Larry was employed at Quellos Group as a principal and financial advisor, specializing in private equity, hedge and real asset funds, as well ashybrid offerings. Follow Larry on Twitter, Facebook & LinkedIn to learn more!