The Executive Suite: How to Find a Venture Capitalist

Friday, May 31, 2013

How to Find a Venture Capitalist

There are few things more exasperating than having a tremendous idea, but not the money to put it into action. Venture capital firms can be the only hope some entrepreneurs have. However, venture capital firms do not just hand out money. You must be ready to prove your worth in order to engage a venture capitalist.

Suggestions

Present a great idea. You cannot go to a venture capitalist and toss any idea in his face and expect to get some start-up cash.
Prepare a thorough business plan. A business plan is not just a summary of your idea and a projection of how successful it can be. You must include information on competitors, how your idea proves to be better and not only best case scenarios, but also less optimistic projections. Venture capitalists are wary of the worst case scenario. You need to address what that would be so that their imaginations do not take over.
Shop around. When you try to find a venture capitalist you can't just go with the first one listed in the phone book. Go to multiple venture capital businesses. Try to do some research on which firms focus on specific types of ventures. If one firm focuses on biotechnology, do not plan on them funding your new line of sandals. You should also check for references and conduct a background check on them. Make sure the venture capitalist is trustworthy.
Persevere through rejection. When you are trying to find a venture capitalist, be ready to repeatedly hear the word "no." Even the best ideas can be rejected over and over. You have to match your vision with that of the venture capitalist. That can take time so do not give up.
Negotiate a good deal. When you find a venture capitalist who is willing to invest you need to make sure that you do not give up your whole idea and future to them. Venture capitalists want to take as much ownership and control of your business as possible. Make sure you retain an ownership stake and control over the direction of your project.
Work your tail off. Once you find a venture capitalist who is willing to invest in your idea, the work is just beginning. Now you have to make all the projections happen and make the best of his investment.