4 Ways To Shape Up Your Business For Venture Capital Fundraising

4 Ways To Shape Up Your Business For Venture Capital Fundraising

Capital. In the English language, a capital letter signifies the start of a sentence. Capital letters transform ordinary words into names to remember.

Relating this to venture capital, the hardest thing about starting your own business is finding the capital to do it.

Not everyone has enough money to grow a business, especially if you’re just starting out your career.

Some way, somehow, every successful company starts with capital. 

In these circumstances, venture capital funding from firms like vc australia can make or break your start-up; if your start-up will be crushed under rising overheads, or rise with a timely injection of cash.

Maximizing your appeal to venture capitalists will be useful not only because their help is often crucial to your business, but also the fact that even if you got lucky with a firm once, you will probably have to repeat the fundraising process every year or two.

Therefore, this article will aim to give you four easy tips to make yourself a star business in the eyes of venture capital, and give yourself the best fundraising chances.

If you’re an aspiring entrepreneur with a great business idea, keep reading to find out how you can turn your dreams into reality.

Be a player, not a coach.

To be a founder of a startup requires a person to have a certain ego, drive, and having confidence in yourself. However, while venture Capitalists are looking for smart and talented founders, they are first and foremost investors looking for someone to coach.

Since one of the great things about raising funds from venture capital is the partnership with an industry mentor, remember to be humble. They’re looking for a talented founder, not an arrogant one.

Here are some things they look out for:

  • Humility
  • Transparency
  • Strong desire to learn
  • Willingness to listen and consider advice
  • Being quick to change

Know your Investors

Research, research, research.

Research, self-improvement, and asking questions are the biggest edges you can give to yourself. Best part? They come absolutely free. A lot of information is completely available online.

Research on what your investors are doing currently, what they last backed, why they make the choices they do, and their thoughts on what constitutes good practice. Put in the effort to understand the person you are pitching to just as you hope they would spare the time to understand you back.

Tip: Don’t wait until a day before the interview to do this. You should not research for the purpose of bootlicking, but rather to gain genuine insight and to align yourself with their vision and their journey.

Write Down All Relevant Investors

Like I said in the previous sub-point, a large portion of information about these investors is available online because they often want to have a well-curated profile to help startups find them just as it helps them find startups.

Get their email addresses and LinkedIn profiles, and really put in the effort to reach out to them. That’ll really set you apart from other lazier, complacent businesses.

Know what you’re worth

Your Competitors

It reflects very well on you when you are caught up with your businesses’ primary and secondary competitors, as well as what strategies and moves they have been making.

Whether or not these maneuvers will concretely impact your business, knowing your competition, at its baseline, gives you a vocabulary and a pool of others’ experience to draw good arguments from.

At the core of every pitch are the key questions: “Why will this work?” and “How are you different?”

Know who funds which of your competitors, and how much. Are your competitors trying to secure funding as well?

Pitch to your investors why you deserve it instead of them. Have your competitors managed to secure funding?

Analyze whether they’ve hit their fundraising promises. If yes so, then the market is lucrative. If not, then say that you have something fundamentally different from your competition.

Valuation

Just like what I mentioned above, keeping tabs on what companies get funded, and for how much, builds a solid baseline for your fundraising plans.

In point one, we covered that absolutely no venture capitalist is a fan of ignorance.

Being realistic about what you are worth based on the confirmation gives you a solid weapon to slice through scrutiny.

Your investor will ask about your valuation. Don’t ever mention not wanting to dilute. Keep your head in the game.

The only thing your investor needs is case studies (about your competitors) and objective evidence.

Don’t worry about seeming confident, since confidence comes from knowing your stuff. More importantly, knowing your stuff better than anyone else.

You don’t want to be in a situation where your investors ask you a question about your business that you can’t answer.

Forecasting

Be optimistic about your predictions, but not in a way that sets yourself up for failure.

What I mean by this is, avoid predicting some miraculous growth if your company hasn’t been turning profits gradually since even if there turns out to be a sharp increase following successful fundraising, you are unlikely to hit your wildest expectations.

Know what you want to achieve in the next 18 months, and forecast your company’s growth according to achievable SMART goals along with facts and data to back your predictions.

Improve your Process

Practically speaking, you are going to have to do this fundraising process every 12 to 18 months, so make sure on the practical side, you have a way to reproduce documents about your company, your brand, and continue to update your public online presence so that venture capitalists can spot you, and you can continue pitching to new investors even if you don’t necessarily need the funding at the time.

Conclusion

In conclusion, the ways you can shape your business up for fundraising are identical to the ways you should be running and pitching your business anyway.

By being humble, knowing the market, knowing your intrinsic worth as a business, and continually striving to be publicly transparent, you give yourself the best chance of being picked up by a venture capital firm.