6 Things You Should Know Before raising Venture Capital

1,168 Views Updated: 14 Feb 2018
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6 Things You Should Know Before raising Venture Capital

Funding is a pine tree in every Startups' journey. It not only haunts the founders before they initiate the plan of starting the business in their entre-journey, rather elongate throughout. Venture Capital firms have moderated the inherent difficulties in immerse the fund needs to grow.

Initially, you need to rule out the ideal source of funding. At times many start-ups run on the treadmill for seeking venture capital and later regret. Once you have decided the ideal sources, you need to tactfully deal with venture capitalists to position your startup for a long-term vision.

Things to Know Before raising Venture Capital

• Draft the Roadmap

Firstly, create a detailed list for the utilisation of the funds sought for. Imagine you have the funds in hand already, and then precisely work out an action plan. Without an effective plan in place, one cannot proceed with the process of securing funding from a venture capital fund.

Before, meeting the venture capitalists in person, this exercise clarifies the ambiguity, if any regarding the need for such source of funds altogether.

• Don’t Cheat Yourself

In case you are in a dilemma regarding investing in, your own resources in the business, there are no grounds you could credibly seek funding from others. You need to demonstrate the backers that there is no fallback option.

Starting your sentences with, ‘if it works..’ will make your stance weaker. When you meet the investors, flaunt how whole heartedly you are invested, be it personally, financially or professionally to your start-up.

• Support from relatives are important

At times demonstrating the interest of your friends and relatives in your project gives you an edge to secure investments. Getting your friends and family invest in your business proves the viability of your business plan to the investors by indicating the fact that the people who know you personally, believe in you and your startup.

The chances of securing funds with such pre-validations from others, get enhanced.

• Try it yourself

Build the foundation on your own with the infused funds. A mere idea, on papers, is too risky to convince others. Investors simply prefer high-upside with low- risk investments. Any new idea in its nascent stage seems to be risky no matter how good it is.

Seek help from investors only after you have established a safe foundation for yourself. Generating revenues is a straight forward strategy to convince others.

• Don't Be Rigid

It is important to be open to new financial arrangements offered by investors. Usually, venture capital firms not merely back up your startup rather the seek to make investments in the form of joint venture. This arrangement is more like a partnership.

One should be flexible enough to accept different financing structures. Just make sure the offer benefits both the parties involved. Do your research well about all possibilities, just be self-prepared if they ask for financial control of your business in return for their investment.

However, always aim to retain the control over your company, after all, it was your dream.

• Do Your Background Checks

It is essential to know the investors before you seek for funding. Don’t forget the prior point; investments presuppose establishment of partnership. The investors end up exerting some level of influence or control to protect their investment.

Do your backgrounds checks well, know whom you are affiliating with to align your short or long term dreams before you seek funding.

Securing funds from venture capitals is not an overnight process. It takes time and efforts. Don’t be disheartened even if you fail to convince them in the first place. Keep trying. Don’t forget; venture capital is not the only source of finance.

About the author

Limiting her in few words would be a herculean task. She Likes to add some zing to the story. When not writing, she loves to watch movie. She especially enjoys being a fashionholic. Affiliated with QuickCompany which deals in Company Search, Company Registration, Trademark Registration in India, Trademark Search and Other Legal Activities.

Posted by: kapila Posts: (2) Opinions: (0) Points: 111 Rank: 873

That was the best article about Venture Capitalists that I have ever read. It was a great read  I recommend it to all.

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