All venture capital investors are attracted by the same thing – a return on investment with a lot of interest and capital growth.

 

Every investor has a slightly different perspective on what’s important to them. Here are 8 things that attract all venture capitalists.

Well Crafted Business Plan

The first thing they’re going to look at is your business plan.  One that draws a realistic picture of your company – the good, the bad and the ugly.  Every VC wants to see a business plan that’s adaptable and takes into account stumbling blocks and market changes.  They want a pragmatic plan that demonstrates a realistic approach to achieving measurable goals. Your business plan needs to be strong and backed by proof in order to secure funding.

 

Value Proposition

Are you solving a problem with a better and/or different solution?

Does your company provide a product or service with the potential for rapid and sustained growth?

Are your customers asking if they can invest in your company?  That’s a sign all venture capital investors are looking for.

 

Customer Base

Is your business a product?  Show VCs that people are willing to pay for it and there’s an unmet need that your product fills.  Is your business a marketplace?   Demonstrate to VCs that you have traction on both supply and demand sides.

Be prepared to show real sales and proof of consumer demand.

 

The Founder and the Team

The entrepreneur and management team are the beating heart of a company.  Venture capital investors look for a founder and team with these qualities:

 

  • Passion: The entrepreneur must demonstrate a contagious excitement about their vision for the company.
  • Tenacity: The entrepreneur must prove they have the stamina and willpower to stay with their vision through thick and thin.
  • Flexibility: The entrepreneur must be willing to reevaluate and refocus their plans when things don’t work out as anticipated.
  • Commitment: The entrepreneur must be willing to invest enough of their own money into this project to convince investors they’re serious.
  • Teamwork: The entrepreneur’s team must prove they can work effectively together.
  • Coachability: The entrepreneur and their team must be coachable. No team knows everything they need to know to succeed.
  • Knowledge: Investors prefer to back teams that really know their market by having backgrounds that are rich and impressive in the market niche for which the company is engaged.

 

Scalability

Venture capital investors are looking for scalable businesses.  Is your company able to add new customers without having to hire large amounts of new employees to handle the increase in customers? If so, your company is scalable.  If your next sale requires as much time, effort and resources as every sale before it – your company is not scalable.  Constantly adding resources costs money that cuts into your revenue. Growth for growth’s sake is not attractive to investors.

 

Disruption

Is your product a disruptor?  Venture capitalists want to fund projects that are unique and can’t be easily replicated.

Do you have a proprietary or unique product that creates barriers to entry and/or precludes copying by the competition?

 

Business Model

Be prepared to defend your business model.  A serious investor will track every revenue dollar and then seriously challenge every expense it’ll take to generate that revenue dollar.

Your business model needs to be:

  • Profitable
  • Repeatable
  • Scalable
  • Predictable
  • Defensible

 

Vision – Mission – Core Values

Have you written your mission and vision statements yet?  How about your company’s core values?  Venture capitalists are looking for passion and vision.  They’re also looking for leadership backed by strong core values that will see the company through challenges.  Take the time to clearly articulate them on paper.  VCs need to see that you and your company know who you are, where you’re going and how far you’ll go to get there.

 

Exit Strategy

Every venture capital investor wants a solid exit strategy.  How are they going to make their money off the investment they’re making in your company?  Exit strategies can take different forms and it’s important that you articulate yours.

Until next time,

To Your Growth & Profits

William De Temple CEO Antirion LLc

William De Temple, CEO Antirion LLC

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Hartwig, E. (2013). 4 Things Your Startup Needs to Attract Venture Capital. Available at: http://mashable.com/2013/05/06/startup-venture-capital/#bgVfllwDWGqt