4 Ways to Get Your Startup Funded by Venture Capitalists

How to Attract Venture Capitalists

Attracting angel investors and venture capitalists is not a child’s play; they look for the best out of the best before consenting to invest their wealth. Most of the times, even the best startup proposals don’t get to make it to their pockets, and sometimes, even those who do not seem to win the race, come out as victors.

Getting funded is very crucial for the new startups because, without any initial investment, even the most promising ideas won’t get to flourish. It’s like a seed that needs water and land to grow, that’s why it’s also called seed money.

There are myriad qualities that venture capital firms look for in the potential candidates, and convincing them for early-stage funding requires riveting research and planning. The startup proposal must demonstrate clearly the purpose, uniqueness, and the most important aspect: how investors and VCs will be benefitted from funding the idea.

Hence, if you are looking to attract venture capitalists to kick start your career, here is the 4-step guide to get your startup funded:

1. Outline match-winning goals and objectives

At the early stage, the idea lies within your head, and it’s your choice whether to keep it or bring it. The very first step to attract VCs is by clearly defining your objectives and future goals. What made you think about your startup and how do you think it can benefit society and ultimately, the investors. Persuade them how you intend to invest the money because successful ideas don’t have anything to say no to.

A startup is usually presented as a formal documented business plan and an attractive investor pitch deck in the later stages. These serve as a roadmap to showcase your idea and vision to achieve long term goals and objectives with true perseverance. Remember, your idea is your responsibility; the better you define it, the better you achieve it.

Develop long-lasting relationships to better transfer your thoughts into their minds. Your probability to win your bet relies on how well you commune with them and explain to them what you have in your mind to convert it into money. Take your time to research their past investments and try to align your interests and objectives to steal their attention.

2. Prepare your budget ahead of time

It’s true that early-stage startup ideas are prone to abrupt changes and fluctuations, yet it is highly recommended to stay prepared with an accurate budgeting timeline for better chances of approval. Fetch as much historical data as you can to figure out exactly how you plan to invest without falling apart.

Ever wondered why VCs invest in someone else’s ideas? Just to get their money multiplied! They are more interested in knowing if you are worthy enough to handle their money for your cause, and that’s where you need to focus.

According to a survey, startups spend approximately 25% of their total budget on HR services such as hiring employees, salaries, initial training, etc. Prepare alternative policies in case of failure, and strategies to reduce burn rate and maximize investment runaway. Highlight capital investments such as marketing, equipment, and legal costs to prove your market survival abilities.

3. Showcase your vision

It’s the everyday deal for VCs to meet individuals with resonating ideas and remarkable vision, then what you have? Every candidate comes with a story of success, but very few are the ones that turn into success.

Tell a compelling story based on factual scenarios and relate them to your idea. Showcase your vision and passion for success, and prove to them that you have more than a hanging-in-the-air idea to return the profit. Bring over some of your real-life examples and how you managed the crisis.

It’s not simply to express your idea; it’s about the approach. Stress over your team as well because their participation will also be crucial to getting yourself funded. A strong idea can help keep the VCs engaged in your story; thus, escalating your chances of acceptance.

4. Present the prototype solution

Angel investors and venture capitalists recline more towards evolved startups rather than just hear about the idea and success that is yet to come. If you only present the idea that lacks an important aspect, the solution, note that your idea will always remain an idea.

While some VCs come with specialization in seed investment who are most interested in the outcome that is promising with minimal traction, most of them prefer to see a tested solution or a tangible product that aligns with their niche.

Of course, without providing the funding, they wouldn’t expect a ready-for-market solution from you, but they would want a prototype that mimics the actual market ambiance that illustrates its worth and persuades them to believe in the product’s high probabilities to return on investment.

Takeaway lesson: Never lose hope

The last but most important point: never lose hope. You might come across situations when things wouldn’t seem to go as per your expectations, but what’s important is hope and perseverance. There are many examples of renowned entrepreneurs who were rejected by dejected hundreds of times, but they never let things go out of control.

It might take some time for investors to understand and believe in your idea; some might even rebuke you for your startup, just like the famous webmail service Hotmail – now Outlook. The founder faced 20 rejections from some of the world’s credible investors; who turned faces when presented with the idea. The founder, Sabeer Bhatia, kept on trying, and now he is a millionaire entrepreneur with a net worth of $300 million.

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