How to Attract Venture Capital

Venture capital firms invest in early stage, risk-oriented businesses. A firm may look at anywhere from 1000 to 5000 business plans per year. Out of that approximately two percent will ever get an interview.

To attract venture capital:

  1. Preparation is a critical factor in funding. Allocate plenty of time and energy to it.

  2. Make certain all your financial records are in order.

  3. Identify professional references who can support your reliability and the need for your product.

  4. Prepare a well thought out, comprehensive business plan.

  5. Write a business summary covering the main points of the business plan. This will be the first introduction of your business. Getting past the first cut will depend on how well you sell your business in this summary.

  6. Identify venture capital firms that specialize in your type of business.

  7. Learn as much as possible about the funding process for each of the firms.

  8. How is the capital going to be used?

  9. If possible, talk with businesses that have been funded by each of the firms.

  10. Write a succinct, but compelling cover letter for submitting your information to the firms.

  11. Select 8-10 venture capital firms that you definitely wish to approach.

  12. Customize submission information to fit the preference of each firm, including reformatting the business plan if needed.

  13. Submit your applications.

  14. About 2 weeks after applying, call to request an in-person visit

  15. Do not be afraid to continue to keep in touch. Do not be a pest, but also do not be afraid to ask when you might know something and if they mind you checking in occasionally.

Tips:

  1. Each venture capital firm usually focuses its funding. Target firms that focus on your type of business.

  2. The National Venture Capital Association provides a wide variety of resources for finding venture capital firms.

  3. If you feel you lack the expertise to properly prepare a business plan, software is available that can walk you through the process.