Venture Capital For Dummies
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Just as you would prepare your home when you put it on the real estate market, you need to get your company prepared for investors: Gathering the right advisors, making sure your records and certificates are in order, planning your future growth, and really connecting with your customer are all important points when getting ready for investment.

Coinciding fundraising efforts around milestones

One of the hardest things to do in fundraising is to know when to start fundraising. The good news is that you don’t have to decide on one particular, set-in-stone date. Instead, one way to ensure you have the funds you need when you need them is to time your fundraising between milestones.

Identify all the major milestones that your company must tackle before you achieve profitability, and then plan your fundraising efforts to coincide with the period of time after you’ve just attained a pretty nice milestone and right before you tackle the next one. Your just-completed milestone will serve as a great story that shows your team’s ability to execute.

Notice that this suggestion isn’t “begin fundraising after you complete development of your whiz-bang product.” You can — and should — begin fundraising rounds earlier than that. The key is to know your business, know your market potential, and be able to show progress toward your goals.

Include in your research information about business plans, product development, promotion strategy, and communicating your future revenue streams before you ever earn a cent from your product. Develop a checklist to determine when you should start fundraising.

Polishing your company for investors

Get your company to a point where you feel comfortable having a figurative open house. Many companies are moving and developing so fast that they have ugly loose ends everywhere. You have to polish your company to raise money:

  • Show your market research in ways that investors can follow. Raw data may be okay for you, but the investor is going to want to see well-designed graphs.

  • Revise your business plan and business model regularly so they reflect the new information that you have learned since you originally wrote the documents. Write a two to three page executive summary for investors (they don’t have time to read the whole thing).

  • List all the strategic partnerships, mentors, advisors, and other supportive relationships that you have made.

  • Plan out employee needs in the near future and start talking to potential candidates even if you don’t plan to hire for 12 months.

Connecting with customers early

Many companies think that they cannot begin to connect with customers until they have a finished product to sell. Nothing is farther from the truth. You can, and should, be connecting with targeted groups of customers as you develop your product.

By the time the product is finished, you will have a small group of happy customers whose excitement you can leverage to promote sales. It’s never too early to talk to a potential customer.

Adding expertise to your business

The number of people excited about your company can be indicative of future success, and VCs like to see lots of high-quality people who are willing to put their names on your company.

You can really increase your credibility with VCs by adding expertise to your team in terms of an advisory board or through strong mentors. Don’t think you have to pay a ton of employees to have a big team!

About This Article

This article is from the book:

About the book authors:

Nicole Gravagna, PhD, Director of Operations, and Peter K. Adams, MBA, Executive Director for the Rockies Venture Club, connect entrepreneurs with angel investors, venture capitalists, service professionals, and other business and funding resources.

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