Venture capital is a way to finance entrepreneurs, supporting emerging projects, of small or medium size.
Usually, it is about startups who are in their first phase, but they show great potential. These are companies that, of course, are not listed on the stock exchange and find it difficult to obtain funds by other means.
And it is that these ventures not only do not have a history that can be shown as a requirement for a bank loan but it is even considered that an operation of this type can be risky.
Venture capital is one answer. And in exchange for financial support, the person or group that finances gets shares of the company, as well as the possibility of making future decisions within the company.
For its part, the startup, in addition to capital, can get contacts and strategic advice, since an investor usually chooses projects in areas in which he/she has experience.
How to attract investors?
Of course, for someone to invest money through venture capital, it is necessary to make sure that these are scalable business schemes with good prospects of growth.
For such purposes, the startup should try to show itself in a way that attracts investors’ interest. How is this done? Let’s see.
Innovation is the key
Definitely, if anything is going to attract investors interested in putting money into an idea is to show that this is a disruptive and unique proposal. In this regard, the experts point out that this is one of the most valued traits since it will allow the creation of a niche in the market.
Scalable model
Another aspect, common to startups, is to demonstrate that it is a scalable business model so that it can be developed from a basic idea and continue to grow without losing the essence, achieving an increasingly greater impact.
Market research
Just as it should happen with any company that starts, a previous market study is required, to identify an existing need and that it has not been properly addressed by the competition, so the service to be provided must have good receptivity.
Have a plan
It is necessary to have a plan. And even more, to show it. In this sense, the entrepreneur should not keep information to himself/herself but should explain everything related to objectives, financing needs, actions to be developed, and profitability projection, since the investor wants to know what he/she is getting into.
In this sense, a clear and detailed business plan allows to better explain which is the path that will be followed. Of course, the investor thinks about his/her profits. And you have to be clear about this, and let them know, at all times.
Experienced investors
It’s not about getting picky, but it is more likely to convince an investor who has experience in the area in which the entrepreneurship is developed. If you are a person with knowledge of tourism, perhaps you do not see so clearly what is the novelty of a logistics proposal. So you also need to know how to focus the search.
Prepare a good presentation
At the time of the business round, a good presentation needs to be prepared, talking about the company, its values, the market, costs, potential and possible results in terms of profitability. All this should be done clearly, and without trying to alter information to look better.
An attractive business team for investors
But it’s not just about the business itself. People are the key to the matter. Let’s remember that we are talking about companies that are just starting out, and where almost all the responsibilities and tasks fall on a few.
In such a sense, there are certain qualities that can make a business team attractive to venture capital investors. Among these are the following:
– Everyone is committed to the idea and they believe in it as if there was nothing more or nothing better in the world. The investor should note that these are people willing to carry out the initiative since he/she will put his/her capital on the line.
– It is not only in art that high levels of passion are required. Entrepreneurs must also demonstrate, with their actions and with their words, that they love what they do.
– Knowledgeable: Although not everyone should be an expert in the same field, it should be a team where everyone knows what they do and knows what they are talking about, preferably with training and experience.
– In the same vein, it is also valued the fact that they are interdisciplinary teams, but with the capacity to act jointly, combining their individual talents in a synergic way.
– Other skills: It’s not only about technical competencies; as we know, nowadays there is a lot of talk about soft skills. In this sense, the ability to analyze and solve practical problems and emotional and social skills are also valued for the good functioning of the team, including the way they manage conflicts and deal with threats.
– An interesting issue, which is also pointed out by experts on the subject, is that investors value the fact that there are entrepreneurs in the team with previous successful experiences.
Of course, the team must be presented in its entirety. None can be left out or hidden in the shadow since the investor wants to know in whose hands he/she will be.
Showing your face is synonymous with confidence. And in the early stages of the venture, as already mentioned, most of the weight is on the team and its ability to turn an idea into reality.