Just like anything, venture capital can be raised by doing it yourself or hiring an investment banker to assist you. Hiring an investment banker is expensive, so you may want to explore raising the money on your own. Should you decide to raise the money on your own, here are a few Web sites that you should know about to help you reach venture capitalists.
1) www.Boogar.com (Angels and VCs);
2) www.TechCrunch.com (Tech blog – go to CrunchBase section); and
3) www.TradeVibes.com (Start Up community – look for companies similar to yours and who financed them. Then reach out to competitors of that venture capital firm or VC’s with similar investment profiles).
Prior to reaching out to investors, you should have a one to two-page executive summary as well as a short detailed business plan or management presentation. When describing your business it is important to focus on the end user and why they need your product.
Answering these three questions honestly will give you solid footing when you enter a conversation with a VC: 1) What is your product helping the end user accomplish?; 2) How many of your end users exist (market size)?; and 3) What is the health or buying power of those end users (market trends)? If your end users are mortgage brokers, auto dealers or newspaper printing presses, then you will have an uphill battle. If your end users are digital imaging companies for medical records or lithium battery manufacturers for hybrid cars, you should see a more positive response.
It goes without saying that a profitable company with growing revenue will find it much easier to raise money than a company that is raising start up capital. Most investors prefer to invest in companies that are expanding into new markets or need capital to fulfill new orders. Start up capital is easier to raise (from institutions) when someone is a former executive from a large company in the field of the start up.
And one more thing, investors like smart and passionate, but not creepy. It is kind of like dating, take the “we’re just friends” hint and move on. But make sure they get the press release after the raise is finished!
Excellent Business Week Article:
http://www.businessweek.com/magazine/content/09_22/b4133044585602.htm
Tags: capital raise, venture capital
