If you passed the Initial Venture Capital Qualification Test, now the real work begins.
Raising venture capital is a pain staking process that must be done in a methodical and deliberate manner in order for you to maximize your opportunities for success.
I know as any good entrepreneur you are tempted to pick up the phone and begin dialing lists of venture capitalists and tell them your wonderful story YOU’RE NOT READY YET. Before you make that first call make sure you are prepared by completing this book.
The process of raising money from investors usually takes the following steps:
1. Identifying your potential venture capital investors:
This is the easy part. BusinessFinance.com has done all the research for you, you only have to enter in the criteria of your business and those VC firms that match will be instantly delivered to you. The catch is that you must know exactly what you are looking for.
The largest risk is from unscrupulous brokers who present themselves as venture capitalists. Anyone who asks you for money in advance of funding is not a venture capitalist. To determine if you’re dealing with a broker ask the names and sizes of their funds. Any Venture capitalist will proudly tell you how much money they manage and the names of the funds. If they won’t tell you or they say it is confidential, they are a broker. Ask for a list of companies that they have funded, if they won’t tell you they are brokers.
2. Researching your selected VCs:
Once you have identified your most likely venture capital firms, then research all of their portfolio companies (companies they have funded). Check their websites to find out who those companies are. Then check those companies websites to find out who runs those companies (CEO, Founders, CFO, etc.) and to determine what your firm has in common with their firms and what you might do together. Venture Capitalists love to have portfolio companies with synergy. Once you have determined that, then begin to network with these companies. Attempt to get to know those that can help you. What might your two companies do together? Try to find out how they got their foot in the VC door? Who opened it for them? What you hopefully will find is a number of contacts that assisted them and may be willing to assist you. These contacts may end up being members of their board of directors, board of advisors, their private investors, or they themselves that take a liking to what you are doing and want to open a VC door.
3. Finding the right legal and accounting firms:
While you are researching your prospective venture capital firms and their portfolio companies also keep good notes on the legal and accounting firms they are using. One of the best ways to get the opportunity to present to your venture capital firm is by an introduction from the lawyer or accountant whom they have done business with for years. There are many professional firms that have contact lists full of venture capitalists that they have helped to close a deal or have audited the books for the due diligence.
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