Anutza Bellissimo, founder of the Stress & Anger Management Institute in Hermosa Beach, California, believes she's learned the secret of pitching her business to venture capitalists. SAMI offers classes and employee training programs to help people deal with their stress and anger. Looking back at the presentations she's made to date, she realized her vision wasn't big enough.
She's since been expanding her vision and thinks the answer is licensing the curriculum, program, name and intellectual property. "I've spent the past four years developing this curriculum. Now I can take it and move it in a big way," she says. She envisions what she calls "SAMI stations" that offer her curriculum at learning centers nationwide. In addition, she says, corporations can benefit from including stress and anger management in their corporate wellness programs.
Amy Rees Anderson was in her 20s when she raised $2 million in venture capital 10 years ago. "I got really lucky," she says. "I was too naïve to know better." Today, as CEO of MediConnect Global, Anderson has raised more than $50 million in capital and teaches courses on entrepreneurship at several universities.
"The biggest thing entrepreneurs have to do is understand what their investors need." Anderson advises entrepreneurs to know how a VC works, whose money is being invested and how long investors are willing to wait for a return on their investment--usually two to three years, Anderson says.
She offers the following advice to women seeking VC funding:
Research the industry you're in. What's your market, how big is it, who are your big competitors--and what makes you different from the competition?
Be able to discuss every aspect of your business. A woman who wants to raise money also needs a detailed understanding of every aspect of her business so that she is comfortable talking about it.
Build a financial model. A financial model is instrumental in obtaining funding, says Anderson. "I had a mentor who sat me down and built a financial model for me. He asked me, 'How many days does it take to do this? How many people does it take to do that?' " Building on the answers to those questions, he was able to predict the company's future several years down the line, a big plus in a meeting with venture capitalists.
Get an introduction. A good attorney can provide introductions to VC firms. Or you can find a company that already has funding. Talk to the CEO and ask whether he or she will give you an introduction to the VC firm.
Research the company. Before you make a presentation, research the company you're considering. Read about the partners and find out whether they are likely to be interested in your venture.
Choose the right VC. If you do accept funding, make sure that the money comes with additional value. Ask yourself, Will the people on my board be good contacts? What do they bring to the table besides cash? Will they help me hire people and find good legal counsel? Will they offer knowledge, advice and mentoring?
Think twice before you consider venture capital. Consider bootstrapping, angel funds or private individuals first, because venture capitalists will take 30 percent to 35 percent of your company. "Once you raise capital, whether or not you still own a majority of the company, you work for them." And don't ignore liquidation preferences. A venture capitalist who stipulates two times liquidation preference would be entitled to receive two times his or her investment before remaining funds are disbursed.