Finance is the lifeblood of every fledgling business, yet the process of raising fund is complicated. Bright ideas and creativity can’t help in establishing a multi-billion dollar company if you don’t have the necessary funds to hire skilled staff and capture the attention of prospective clients. To bring their vision to fruition, entrepreneurs seek venture capitalists who can invest in their businesses.
According to Tracxn, more than 60 technology start-ups have raised funds twice or more in the last one year. Taking help from venture capitalists is one of the ways to secure funds, and it is the best option if you are unwilling to secure bank loans or execute debt offerings. As per recent statistics from financial research firm VCCEdge, venture capital (VC) firms invested Rs 15,600 crore ($2.46 billion) in Indian start-ups in 2015, compared to Rs 14,850 crore ($2.34 billion) in 2014.
If you have decided that applying for the VC is the right move for starting a business, you must need to be aware of the must-have features of your business to attract venture capitalists.
Measure Your Organisation’s Performance
After deciding what your business would be like, give some time and measure your company’s performance with the Key Performance Indicator. When you find that you are fulfilling the needs of many customers or you need more people to serve your customers, it is the time to search for right investors who have an interest particularly in what your company offers. Professional venture capitalists are not interested in experimenting, they want to see why your business is different and better than competitors. To make your company stand out from the rest, you need to show that you have a compelling value proposition. Your idea must be unique and imaginative, which you can present them through project details, action plan, live presentation, tentative plans and even through a case study.
Prepare an Action-packed Presentation
Make a presentation that clearly explains your business ideas and goals. Do a thorough research before writing the script of your presentation as if you are creating a story. The presentation must be equipped with all basic details, key features and roadmap of the suggestive project. Remember! Your presentation must be loaded with facts that may convince an investor even at a slight glance. Talk about your core competencies and key benefits in the last slides of the presentation and make it more illustrative using graphs and pie-charts. You must review the data and accuracy of your presentation before the final submission. Spare some time to design your presentation because a well-designed and attractive presentation can give you an edge-over other start-ups that are pitching to venture capitalists.
What Investors Seek in a Start-up
Any investor, be it a small stakeholder or a big venture capitalist, takes interest in businesses with low risk and high returns as early as possible. Every financier wants to minimise risks after ensuring that the venture he/she is planning to involve will deliver quick and promising results maintaining the agreed terms and conditions. You need to earn their confidence with facts, not fictions.
- Having Clear & Acute Vision
Investors show interest once they realise that the prospective entrepreneur is blessed with a clear and acute vision. Always remember what Thomas Edison said, "I find out what the world needs, then I proceed to invent." It is very important to understand the requirements of people and then deliver products/services that fulfil those. Discover a potential business model that promises to fill a void in the marketplace, because it will help to assure the investors that your idea is innovative and full of potential to make a huge impact in the market.
- Having The Right Team
No matter how unique and strong your idea is, the future of your business rests on the shoulders of your management team. Having a great team of top management and senior employees not only provides strength to the organisation, but on a large scale it enhances the face value as well as the brand image of a business entity. As higher degree of uncertainty is associated with early-stage investing, venture capitalists look for the unified team of the start-ups. They inspect whether the team members have the required expertise.
- Demonstrate Market Tractions
While pitching your business idea to prospective investors, show them the cognizance and the relevance of your business in the market. Market traction is one of the factors that determine whether an investor is interested in funding your business or not. After finalising the roadmap and layout of your upcoming project, briefly share the action plan and execution policies, highlights the benchmarks that may arouse the interest of the prospective venture capitalist.