What's the best way to attract venture capital?
I would like to set up and HR consulting firm as a "born global" organization as I have several international ties already. How do I go about attracting venture capital to fund this type of start up?
VCs rarely invest in consulting businesses because they aren't deemed "scalable". I think your real question is about how to secure investment funding, and you will likely do better seeking that from friends, family, and possibly angel investors. Agree with the other commenters that you will need to put together a robust, well-researched, and most importantly, customer-validated plan first. Depending on the plan, you may also need to have other pieces in place (e.g. team, partnerships, etc.) Good luck!
Just to save your time, energy, money and wasted passion I will tell you that you will never acquire venture capital if you are asking this question. The first thing you must know is that startups do not attract venture capital nor do they attract angel or borrowed capital. You do not attract money in this day and age. It is absolutely positive that any capital that you can acquire for even an operating business will never be attracted - it will be earned. You can take all other information here into consideration but I am quite sure that everyone who has raised any capital will tell you that you will have to use your personal resources first, then friends and family or ally businesses. When you have completed a solid plan and proven your business model and execution capability you would then be in position to approach angel networks and individual angels. When your business becomes scalable - if it does - you can then start working to get in front of venture capital investors. Good luck and keep pursuing that dream.
Before even beginning to look for investors you are going to need a rock solid business plan accompanied by some income projections. Not many venture capitalists will consider an investment without this information.
I would suggest developing Strategic and Tactical Plans, as well. In essence, you want to be able to show an investor:
1. You recognize an "opportunity" and have a (hopefully) unique methodology to make it into a sustainable business.
2. Your awareness of the pitfalls in attaining success.
3. The specific steps you will take to develop that opportunity.
These plans, coupled with a rock solid and experienced team, are the surest ways to show that you will have whatever you need in place to use their investment efficiently. Ideas, per se, are great. Being able to execute what you propose is vital.
All the best.
Another vote for a rock solid business plan. The most important pieces of that plan is the executive summary, no longer than two pages, and the financial section.
This is a tough one! HR Consulting has so many intangibles that will make it very difficult for many VC's to understand the value. So as Kevin Perry says you need to have a rock solid business plan to compliment this you need to have a very powerful and clear definition of the problem you are solving, the distinction in why you, and how you plan to grow and sustain this business.
Like everyone else said: a rock solid business plan. Also, if you are a start up, then approaching VC's is going to be a waste of time. You'd be better to go after angel investors or private individual lenders. I don't know of any VC groups that will do an initial capital raise of if they do, they are going to be extremely picky on who they join forces with and will want 30% or more stake in your company. They will also attach themselves as managers, partners and board members. Do you want to relinquish that much control and take the risk that they will take over your company and give you something in return? Something to ponder. All the best.
VC don't invest in ideas. they invest in cash flow streams. So, Chris and Andrew are correct. I would suggest asking a different question. How would you make this happen without the investment? This will help you figure out how to do it with little money and prove the idea. If you can make that happen then investors will have an interest and you will have far more leverage in negotiating with them. - Dino
I find the best way is to firstly have a well thought out business plan, to convince yourself of the sucess of the venture....then think of who you know that might know the right people that could do the cash injection. This is the best method to ensure you get to present your business model as people you know would always give you the time to present and they know you and your potential
There are many ways to attract venture capital. I would ask you to view some of these links which I find very helpful......GBSH Insights: How to Raise Private Equity and Venture Capital http://buff.ly/1e8OnPq
VCs are not attracted by ideas anymore! There has to be a proven small model of any such business that you are looking at establishing. For example, if you are looking at creating a social networking site. Create the site and prove that it works as a small group first! Show case it to a VC.
Attracting venture capital to any start-up is not easy - see "Shark Tank" on TV. Before anything else you need to develop a business plan for your new business. No one that I know will invest in any business without one. Plus, it is a necessary exercise for any start-up to insure that you have a viable profitable business proposition.
Business plan is key to the success of this. If you have a plan, financially, have prospects and can prove that you can create revenue, then you will have some success with getting a meeting with venture capitalists. Most of the time though, they will want to see some sort of history of success in order to get an investment.