Finding Venture Capitalists to Finance a Business
Fund-raising for a Start-up Company
Venture capitalists and angel investors are important sources of funding that will allow start-up companies to expand its operation and reach a broader market. However, fund-raising may not come as easy especially when there are many other companies trying to get funding from venture capital firms. To increase the chances to receive funding, there are strategies which should be adopted.
Venture capitalists are very important for any start-up company as these people (or corporations) provide finances and corporate advices that will allow the business to operate and expand its market.
Wealthy individuals, more popularly called as angels investors, are also considered as important sources of capital. Usually, these people are successful businessmen who are known to make quick investment decisions but offer limited financing compared to venture capitalists.
Meanwhile, here are some tips on finding people or corporations that will provide financing to a growing company:
Look for venture capitalists who will match the needs of a company especially the amount of financing for its operation. A start-up company should also give consideration to the stage of development of its business, the geographic location, and the industry when looking for investors.
Seek referrals from corporate attorneys, business brokers, and consultants. A single venture capitalist receives hundreds of proposals from different start-up companies at any given time, which makes it hard to even get an immediate response from the prospective financier. However, a person can increase his/her chance of getting funding by seeking referrals from respected people who have contacts with venture capital firms and private investors.
Ask other successful entrepreneurs who have raised venture capital. While some people may be apprehensive to share their trade secrets and strategies which made them successful, budding businessmen can attend seminars, panel discussions, and fairs that will teach about fund-raising. Such meetings can also give them exposure to some venture capitalists.
If possible, choose six (or less) prospective investors. The reason for this is simple: dealing with too many investor candidates can distract company owners from their day to day business operations. It would also be a better idea to choose venture capital firms which are in close proximity with the business, making it easier to have a face-to-face meeting.
In some cases, business brokers and corporate lawyers can be helpful in facilitating the agreement between venture capitalist and a company, especially for businessmen who are new to fund-raising.
After finding a venture capitalist, make sure to maintain a list of other prospective investors so that in case that the first one doesn’t work out, at least there are still other options. It will also be helpful to communicate with investor candidates through letters and press releases so they can be easily contacted when the time comes the start-up company needs new funding.
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