How do I attract venture capitalists or funding?
I have a business idea that I would like to explore. My only draw back is that its a little capital intensive. Therefore the need to find a venture capitalist or some funding.
Kindly assist me in going about this.
Business in Emerging Markets / Growth markets, Scale-able Successful Small Business models are a few which attract VC's.
Depends how big you are or how big your idea is. Normal starting point is Angel Investors, then once you've proved your concept, Private Equity comes next and then Venture Capital. Alternatively, if you're well prepared and have a business plan try www.crowdcube.com, by far the best crowd funding option (No I don't work for them) we've raised capital successfully for clients on the platform.
Once you're operational, a secondary stage option is to use something like www.assetmatch.com to raise funding through the sale of the private shares in your company
Two things rise above all others. First, you must network your way into personal introductions to potential investors. Second, you need a concise pitch that creates urgency among investors to meet personally with you.
Failing to do either is a show-stopper.
If it is capital intensive you may be able to secure funding via Hire Purchase or and Asset Based Lender (ABL). An ABL can advance against plant & equipment so long as there is also a debtor book to fund against. Venture Capital will depend on strength of business case, the management team credentials and likely speed of growth and therefore return to the funder.
I suggest you contact my colleague, Kate Ingham at Alchemy equities. Kate specialises in capital-raising for female entrepreneurs.
You can reach Kate at +61 2 8088 6224 or +61 414 321641.
just sent your business plan to me and I will see and help you or you have a better idea
take care best regards hwie Kwee
Theuri: there is lots of good feedback contained in the responses below. Understand that a VC will generally churn through 1200 proposals in a year. Of those 500 will get face-to-face meetings, 10% of those will get into a due diligence phase, and of those, 10 will make the cut and get funding.
You should try crowd funding - if you're not after mega millions and don't mind spreading the wealth, it's a cool option and actually, happens fast, if your idea get traction. Go to places like Kickstarter or google for options and see which one is the best fit. Good luck to you, Theuri!
Have you thought of Crowdfund. I have a website for you to check out.
I'm inclined to go with a combination of Luke Havard and Ellen Harris have said. Perhaps the best way to get started (and to fine-tune your executive summary of your project) is to sketch it out for our group on Mosaic Hub and invite criticism, correction and capital -- all at the same time. In a best case scenario, you'll find some interested investors [they needn't be venture capitalists, per se]; a realistic case scenario, you'll get some comments regarding your presentation of your idea which will help you improve upon it in order to attract the needed capital. I would be very interested in seeing your basic plan in summary form.
(5/06/2013 Update - Great article,Theuri: http://recode.net/2014/05/05/why-wont-anyone-give-me-money/.)
You'd be negotiating from extreme weakness, Theuri. Even if you could attract funding, you'd end up owning so little of the business that it probably wouldn't be worth doing from your standpoint. Among other things, as Bernadette Boas already noted, investors expect you to have skin in the game. That skin can be cash, 'sweat equity', or, more commonly, a combination of both. But they want to see that you believe enough in your own idea that you have made some sacrifices on your own before you ask them to do the same thing.
Outside capital-providers invest at different stages. There are early-early investors--'angel investors,' they're called. Others wait until a business is well down the road before they pony up. They know it costs more for them to do it that way, but they also know that their risk is much lower.
At a minimum, you're going to need a P.O.C. You can't do ANYTHING without that. You're also going to need a business plan that describes the business in all its aspects (soup-to-nuts), along with the processes, key people (and their backgrounds), the target market (and its demographics), and why your solution solves a 'burning need' in the marketplace in a way that no one else does. . .or can. 'Can' is especially important because it's crucial that you design ways to prevent imitation or substitution on the part of would-be competitors.
Long story short: You're looking for $ too-too early. First things first. Luke Havard's advice is sound: "Make sure you do as much research about your business model as possible and ensure you get all your number right first." But that's only part of it. Investors invest in people, and you have to get the people side right, too. Don't expect any big salary, either.
Henry Val is also on-point: "Is there a business plan available or executive summary?" All of us could do more to help you if you were more forthcoming in what you're talking about. If you need an NDA before you do that--and I think you do--then feel free to contact me--cfa2005(at)gmail(dot)com--and I'll send you an NDA. Once that's in place, we can talk, and you'll be protected. (I'm a CPA who also holds the Chartered Financial Analyst designation.)
There will be no charge until/unless you agree to it ahead of time. We don't do business that way. Hope to hear from you.
This is the most difficult phase of a start up
Having a product ready to market is definitely a plus having your product patented is a requirement before you request VCs to start to take you seriously
Preparing a brief business plan summary with clear indication of use of proceeds that will generate sales and ROI will get the attention if every VC I. Your vertical space
Finally you need to know or network with the key VC decision maker / Investment committee to enable a favorable decision
Do try to out think the VC prepare to woo them with an opportunity that will succeed to make them more money
They need to be comfortable with concept and needs not to excessive but with practical application
The next step is to selectively submit to not more than three VZs that play in your space do not Blast email every one with a time line of 30 business to accept or reject your proposal for investment
Be prepared to negotiate the counter offer because we always do not get what we want
Most times owning 25% of a $100million company that is growing is better than owning 100% of zero
Very simply put, you have to appeal to their sense of greed while minimizing fears about risk.
You must demonstrate a clear understanding of all the factors involved in your business model, the market opportunity in front of you, and exactly how and when you'll be able to generate a return on their investment in terms of revenue and/or valuation growth. A well constructed and supported financial model will assist with this, but ultimately you must be able to communicate it concisely and effectively yourself. They need to believe in your ability to execute as the business leader, just as much as they need to believe in the product or service that you'll be selling.
Who is your customer? how bad does he need your service or product? how much benefit does your customer get from your product ? how many customers have you spoken to about your service or product ?
This is what i ask of any person looking for funds and then i ask more .being in business is Passion and you need to have that too when speaking to any investor platform.
There is so much you don't tell me here? Do you have an existing business or is this a new venture? If you don't have an existing business and this is a "start up" then how much have you already invested in getting this idea of yours off the ground?
Irrespective, a well written business plan is the first step and if this is a start up and depending on how much you require, then I'd stay away form Venture Capital and go for a business angel. You can then get your idea to pay dirt and exit your angel with the VC or external funding later down the road. Thats the quick version reply but this is a very big question and I'm not sure I have anything like all of the facts,,,,
If it is possible to have a dummy/protoype or test somewhere, this would help tremendously. Almost no VC would give a lot of money to a first-time (?) entrepreneur with an idea, unfortunately. The better you can explain what problem you're solving for whom and why your potential clients would pay for it, the more doors will open for you.
Tell me a little bit about your idea. I have access to funders that have no limits on the amount.
Theuri, all of the below advice is dead on...... especially proving your product or service is a viable one, let alone one that can be invested in (as they are fewer)...and note, many VC's and angels expect you having skin in the game - having spent money on it as well...therefore put your focus on validating the product or service, which you can do with little to no money, get involved now with various business and VC groups in your area, build relationships as you go, and then when you are prepared to pitch you will be one step ahead.
But first, if all you have right now is an idea in your head....get it down on paper and a plan - without that you won't get people to listen and you don't want to take anyone's time to early in the game as it could impact you when you are ready to go (though it doesn't have to 100% ready, but it has to be more than 0%).
Focus on networking and finding the right VC firm. You can also apply to accelerators in your area. They are very competitive however if you have what they are looking for, its a great way to gain visibility.