Perhaps the most sure-fire method for getting the attention of your venture capitalist is through the recommendation of a previous entrepreneur or colleague. Legitimacy is often about experience, but the benefit of playing the “who you know” card is, and always will be, the best method. First and foremost, rely on your network and your relationships when seeking funding for your business.
Each of the aforementioned questions could and will produce more follow-on questions which will ultimately provide the VC with about as much information as he/she may need to know in the event your company receives an investment.
In general, venture capitalists are data-mongers. They scour business plans looking for patterns of previously successful businesses. Believe me, most VCs are able to spot winners rather quickly. It may be a differentiation strategy that creates market leadership in a particular (often newer) field, it could be a significant competitive barrier or even a highly-technical team of whiz-kids. Combinations of the aforementioned help, but something must stand out for investors to want to throw cash at a deal.
As part of their data-mongering, VCs like great economics. If a deal lacks core, believable economic data to back up the value prop, it’s dead in the water. The value proposition includes the following key features/questions:
When it often takes millions of upfront investment–especially in the start-up world–the answer to #5 on margin is absolutely critical to winning over investors. They don’t just want 10% returns, they bet on many deals knowing that only a small few will ever really explode and become huge successes. Your pitch is three parts: you and your team, your product, and your plan. Perfect all three and VC money is much more easily acquired.