First round funding or "venture capital" typically follows seed and early stage capital that was used to build the business’ full-time management team, develop the business’ first saleable product, and demonstrate that the business is very likely to be profitable.
Before approaching funding sources the following should be completed:
- Financial Analysis: Identifying all sources of revenue, assessing likely business costs, determining capital needs and modeling financial projections.
- Market Research: Consisting of primary and secondary research to determine market size, market growth potential and other relevant factors.
- Competitive Analysis: Identify relevant competitors and assess their strengths and weaknesses as an aid in determining underserved market needs and potential market demand for a new business’ products and/or services.
- Business Plan Development: Developing thorough, actionable plans for implementing your mission statement and, subsequently, turning a profit.
First round funding sources are primarily hands-off investors who will open their rolodexes to aid you with their contact base and open their wallets to invest in your ready-for-market business.