ARTICLES MANIAC ? Raising Venture Capital In 5 Steps

When seeking venture capitalists to infuse your business with the cash you need to succeed, it helps to know where you?re going before setting out. This is what to expect.

1. Make sure that your presentation communications and your due diligence communications are ready for presentation.

Make sure that all of your pitches are fine tuned, and ready to be presented. This means your elevator pitch, your emails, your business plan and your slides should be ready for presentation. Pay particular attention to your operations plan, because this will outline the risks involved with investing into your business. Also make sure that your executive summary is in great shape; it makes the first impression upon your investors.

2. Draft a master list of VCs to contact

Get access to a private equity firm database program, and use it. Plug in your key defining factors ? such as location, sector, and growth stage ? to narrow the list. Scour the websites of the VCs on your list to verify the resulting data, and confirm that they are actively investing. The more VC firms you eliminate from your list, the more powerfully you can focus your efforts on the firms that are most likely to match your business profile.

3. Make contact with your list prospects

You?ll need to determine the right people to contact on your list. Managing partners are usually too busy to entertain you. Partners have the time to speak with you and they have company clout. Associate partners read the bulk of business plans, but they have less clout than partners. Venture partners have the most time, but they also have the least amount of power. Therefore, the higher up the ladder you can go, the better it would be for you. Having said this, nurture your existing connections with teaser emails.

4. Meet with your VC prospects

This is where you make your presentation. Show your slides, and answer questions. Know that you will be asked how much money that you?ll need, what your company is worth and what?s the exit strategy? Be sure to leave with some sort of a solid answer, regarding investment. Be certain to deliver upon any pertinent information that is asked for, such as your financial information, your leases, employment agreements, etc.

5. Negotiate the terms

Be ready to compete with and for investors. Reach out to more than one investor at once. Also, be aware of liquidation preferences. You want to secure a 1x liquidation preference. This means that your investors will gain money from an IPO sale or from a buyout. A 2x or a 3x liquidation will keep you from receiving money for extended periods of time. You?ll also want to beware of the participating preferred liquidation preference.

If you?d like to know how to create a professional business plan quickly and easily, then consider using a simple business plan template, so you finish your plan in hours, not days, weeks or months.

Source: http://articles-maniac.tk/raising-venture-capital-in-5-steps/business/

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