How to Make Business Plan Work in front of Venture Capitalist?

Venture capitalists are looking for a business that can disrupt the existing industries, make returns on investment and ultimately alters the entire world. They focus more on people rather than products. Investors are looking for people who are hungry for success and who can take the business to the heights of success.

You will need a venture capitalist at some point when your startup is growing. Venture Capitalists can demand million dollars as they support a new business from its initial stage to later one. Since Venture Capitalists deploy a large sum of capital,expect significant returns, so the process of gaining profit from these institutional investors is not an easy job. Let’s take a look at some aspects which can help you make the business plan work in front of the venture capitalist.

1.  Understand how venture capitalists make money

You can make the business work if you understand how venture capitalists make money. The funds of theventure have limited and general partners. Limited partners are the passive investors and contribute capital while general partners manage the money.

Once you understand how the venture capitalists make money, you will come to know the dynamics between the funds and check size. For instance, you do not need to write $100,000 checks for fund of $50 million.

2.  The pace and cycle of fund

Sometimes, the investors spend the entire fund and focus on raising new funds but do not take any investments. The funds actually deploy the capital with a particular pace. It is compulsory for an investor to ask how many investments the fund typically does per year or quarter and also the investments done in the last year.

3.  Get a good introduction

The venture capitalists test that whether the founder has the ability to get an introduction to the fund through a particular network or not. Some people started stalking the venture capitalists which is not a good idea. The venture capitalists actually from the founders to use their network to get an introduction.

Professional and successful founders know that funding can only happen when the ventures are welcomed and excited about the opportunity. So if you get a warm introduction then it can reduce some of the risks around backing a particular business. It is evident from research that 84% of new and beneficial opportunities start from a warm introduction.

4.  Venture Capitalists are interested in knowing you

Venture capitalists are interested in knowing the founders and watch them execute. They observe that how you can make progress before committing to any investment. The venture capitalists are looking for the way through which they can reduce any risk, so if you are a start-up founder, then the risk can be reduced if the ventures get to know you. However, if you are aprofessional and serial founder, then the risk is automatically minimized.

Professional founders do not just look for money. Instead they roam their eyes to find a partner who can build businesses with him. These successful founders know that all the partners or the firms are not same, so they can use this platform for knowing the partner who can have a mutual match.

Leave a Reply

Your email address will not be published. Required fields are marked *