Who are they?
A venture capitalist is defined as a private equity investor, willing to provide capital to companies of all sizes including startup operations in exchange for an equity stake. The key to attracting a venture capitalist is proving to them that your business has high growth potential. Venture capitalists are known to be hard to impress so if you have the chance to engage with one, your best bet is to put your best pitch forward.
Now, it’s true venture capitalists can be hard to impress, but on the flip side of this just know that they’re always looking for an opportunity. They’re notorious risk-takers who, despite all the odds that are often stacked up against a business concept, they will still take a leap of faith.
How do VC’s think?
When it comes to a mature company, their processing and thinking are much easier to predict. The risk is lower because the concept has been proven and establishing value is fairly straightforward. As long as they can see growth, consistent growth that gives them a strong return on their investment, the investment decision comes relatively easy. But, in the case of a new venture or startup opportunity, that’s when a venture capitalist really has to put on their hard hat to find out if the investment they’re being asked to make makes sense for their bottom line.
What are they looking for?
A venture capitalist is going to want to hear about your concept, how well you know the market, where the trends are, and where your business fits in that mix. They’re also going to want to see solid financials that give them peace of mind that the investment they’re being asked to make will yield sizable, realistic returns. All of these things and others will need to be captured in a business plan.
What Do Venture Capitalists look for in your business plan?
A venture capitalist is going to go over your business plan with a fine-toothed comb, looking for any and every instance that raises a red flag and tells them to walk away. Don’t misunderstand; they want to invest in a needle in a haystack that increases the value of their portfolio. Yes, they want nothing more than to seize a promising opportunity, but first, they have to be sure. The best way to make them feel comfortable is with a sound business plan that includes:
- Management team: Finances matter to venture capitalists, but they tend to be more interested in the team they’ll be partnering with than capital. Their thinking is that if they’re investing in sound professionals who have a true understanding of how to build and conduct business, the return on investment is likely to come. They’re typically not looking for new business people or those who don’t have the type of resume that warrants an infusion. So, when it comes to this portion of your business plan, be sure to highlight the strengths of your management team and how they add value to your business.
- Market research: Showing venture capitalists that you understand the market is another important area your business plan will need to focus on. Showing that your business will operate in a large, defined market will put them at ease and assure them that they will be in a position to receive the large ROI’s they’ve grown accustomed to. Expectations are that your business plan will include a detailed market size analysis with growth projections for five years.
- Your competitive edge: Venture capitalists will want to know what your competitive edge is – What sets your business apart from all of the others operating in your space? What is the problem your business is solving and is yours capable of best solving it? Things like this are important because not only do they represent your competitive edge; they also represent barriers to entry and this, in turn, could position them for stronger returns.
We will Craft the Ideal Business Plan that Attracts Venture Capitalists to Your Business
A venture capitalist is a viable resource for any entrepreneur regardless of the stage or size of their business. Firms and individuals like these are looking for investment opportunities, but first, they must see a sound business plan that includes all of the areas touched on above and more. Financials that show a return, marketing that is based on sound, practical strategies, and assessments of all the major players. These areas and others are all included in plans developed by the professionals at The Coley Group. Our staff of seasoned MBA writers can take your concept and sculpt a business plan that positions you to secure the funds you need to move to the next level. Please feel free to contact us for more details on how we can assist you.
