5 things you need before approaching a venture capitalist

5 things you need before approaching a venture capitalist

If you’re running a startup (or thinking about creating one!) you’ll likely have spent countless hours and sleepless nights researching one of the most critical elements of bringing your idea to life: funding. And that means you’ll have run into the big guns of company funding, the venture capitalists.

Before you start elbowing your way into a meeting with these dream makers, you should ensure you’re well-prepared. Unlike other types of funding, you can’t just walk in with spunk and a smooth pitch, expecting success (you should have done that in your angel funding round, alas). There’s a process, and it’s going to take some planning.

Let’s shine a light on the things you’ll need to really knock their Hugo Boss socks off:

5. You’ll need a team behind you that inspires confidence.

You’re not going to be expected to have three thousand of the world’s finest employees behind you, complete with a Google-inspired campus and office sleep pods, but you’ll need to really sell the expertise that’s driving the startup. Your own, and those of your employees, advisors, mentors and any investors up until this point.

VCs, in essence, invest in teams. And your team is your ultimate point of difference.

4. There’s proof in the numbers, so keep your metrics handy.

The nitty-gritty elements of your pitch will need to be backed up by solid evidence. If you’re telling them you expect fifty percent growth in twelve months, you need to be able to show how you’ve arrived at that prediction. Ensure you can point to real metrics for any claims you’re making.

And when it comes to VCs, they will want different data depending on your industry. Research a comparable company or competitor and aim to find the key elements on which they are measured. If you’re in FinTech, looking at successful online fashion retailers isn’t going to be specific enough, and you’ll most certainly miss crucial elements you need to deliver on (which could make or break the deal for you).

Want to see the metrics VCs really care about? This guide is gold.

3. Show them (how you’ll be using) the money.

This might seem obvious, but be sure to keep it front-of-mind that every VC is going to want to know, in detail, just what the heck you plan on doing with their cash.

Some examples you might wish to consider include:

  • Advertising: Social media, Google ads, TV, sky-writing… whatever direction you want to head in, you will need to allocate the spend and project the expected results. If it doesn’t align well with business goals, scrap it.
  • Recruitment: If you’ve got your eye on a hot-shot CFO, or want to poach an app genius from Facebook, you’ll need to budget for it. And of course, project exactly how they will help you generate wads of cash.
  • Facilities: If you’re gunning for a new office space, be sure to justify how it will help you achieve business goals and meet growth objectives - just wanting a waterfront balcony isn’t going to cut it.

2. You’ll need to research your VC.

As much as you will be craving delicious funding wherever you can get it, it’s important to know who you’re potentially partnering with in your business.

VCs often have different interest areas, so while one firm may be committed to apps and software, another might have a primary portfolio filled with medical technology.

Picking one with a vested interest in your particular business area is advantageous, but a double-edged sword - they will “get it”, but they are well-versed in the entire landscape including your direct competition, growth potential and common pitfalls. Be prepared to be grilled, hard.

1. Be cool, but not too cool.

Mastering the art of juggling energy and passion with outright bluster is tough. VCs want to see enthusiastic entrepreneurs, but draw a line at being stalked with emails, calls and a constant flow of documents.

They want to feel excited by your journey and will look to you to set an agreeable energy. They’ll also be on the lookout for your listening and communication skills.

Keep materials concise, not bloated with the boring technical jargon. Always get to the heart of your business and future plans, and sum up how you’re going to get there with confidence. They’re busy people, and your time with them is to be used wisely.

Need to fine-tune your soft skills before heading into the big pitch? F4S can certainly help.

They Love Us

500 Startups