March 3, 2022
For those seeking to fund a company in order to take the company to greater heights, among the biggest challenges is acquiring suitable investors. But how best to do this herculean task?
There are several answers to this, and one of the keys is first to have the nuts and bolts of your company’s vision first laid out.
As the great baseball philosopher, Yogi Berra said several times, “You’ve got to be very careful if you don’t know where you are going because you might not get there.”
Realistically, you can’t expect to attract investors to your company if there are holes in your business strategy big enough to drive a truck through.
Venture Capitalists are not gamblers. In order to attract them, a company needs to show such investors that investing in your business is pretty much a sure thing.
And how do you do that?
First by clearly creating a business that works. Realistically, one of the biggest
problems with attracting Venture Capital funds are attempting to get it too soon.
Venture Capitalists, who will pony up between $500,000 and $3 million or more are going to want to talk to your customers, talk to experts, and see a careful research business plan for your business.
Others may invest in your business as a start-up, but Venture Capitalists want to see that your business is already profitable, has most of the kinks worked out in it, and that fundamentally, that the capital acquired from a venture capitalist investor will
make a huge difference in your company and help take it to the next level.
So by all means, create a sustainable business before you seek investors
Okay, what’s next?
Realize, according to Andrea Di Pietrantonio, a portfolio manager for a VC firm, that it typically takes around 62 venture capitalists to actually fund 1 round of VC seeding.
That’s a lot and those serious about obtaining VC fundraising need to understand the
odds, which are about as much as finding a serious love interest on Tinder.
So besides getting all your ducks lined up in a row for your business, and seriously tweaking everything possible into an elevator pitch scenario, the next step is to find your VC investors.
And for those Andrea suggests that you use your investor’s chain of resources.
Let’s say you have managed to attract even one Venture Capitalist to the table, willing to invest $500,000 in your company, which is just 10 percent of what you need.
That’s okay, but ask that investor to provide you with the names of 15 business acquaintances that may also be interested. Relying on their network, rather than your own, will tend to produce much greater results.
And if just one of those 15 names pans out, in turn, ask that investor to provide you with 15 names.
This way, your network gets larger and larger, providing you with realistic sources of names to contact.
Step two in the process is to get the most experienced fundraisers to know to help out.
According to Andrea Di Pietrantonio, there are many reasons that firms are rejected for funding by VC investors, including the company does not have enough traction in the market, the investors deeming it too early for them to be involved, your business is out of the not in focus for the fund, your company is in the wrong geography for the fund, the company has temporarily stopped feeding funds to anyone, your business does not have enough scalability and more.
Since there are so many reasons why a VC New York capitalist will not invest in your company, Andrea says to keep pitching and have thick skin, because frequent rejection is part of the deal.
After all, the Beatles, who were before their breakup the most successful band in rock history, were rejected for record deals by at least 14 recording companies.
The same principle applies to obtaining Venture Capital. Expect to get rejected multiple times over, but with every single rejection, do your best to learn why.
The same VC investors that reject investing in your company due to reasons such as your company is not aligned with the objectives of the investor may still be willing to provide you with an assessment of the strengths and weaknesses of your business. Although, they may even be able to provide you with some other VC names that you might try.
