How to convince a Venture Capital fund to support our project?
The Venture Capital Fund is a great opportunity for entrepreneurs to raise capital. Unfortunately, as research shows, only about 1% of projects receive support in this way. What are the reasons for this? As it turns out, an innovative idea is not enough. Even if we are convinced of the rightness of obtaining capital, it may quickly turn out that the potential investor will not share our opinion. The main problems of such a low effectiveness of receiving support are the lack of market research carried out, insufficient competence in presenting and focusing on elements that should be omitted in the first place.
Avoid presenting a business plan
Many entrepreneurs present a business plan at the very beginning of the application procedure. This is one of the most common mistakes as investors do not require this document in the first place. In order to present themselves in the best light, large-sized documents are often presented, which should be shortened to a minimum during the first meeting - the investor is interested in presenting the most important aspects of the project in a nutshell. Instead, he may be discouraged by a too long presentation, which is enough to get the project "in the drawer". Another disadvantage of the business plan is the need to make corrections on a regular basis, so the elements presented at the meeting do not necessarily have to be up-to-date in the next stages of project development.
No market analysis
In order to do their best, entrepreneurs start by presenting the advantages of their project. Most often, they are so well prepared on this topic that they completely forget about the possibility of presenting defects or comparing the design to the competition. Even if the project is innovative and apparently cannot be compared to others, it is worth doing an analysis of potential threats that may appear upon entering the market. A little self-criticism is therefore more than indicated. Here there is also the issue of estimating revenues and capital requirements - the lack of these elements virtually completely eliminates the chance of receiving support. Of course, the task is not easy, since our start-up is just about to enter the market. Therefore, it is worth asking for help from specialists in this field, which will certainly be appreciated by the investor.
Short, concise and to the point
Investors pay a lot of attention not only to the specifics in the presentation. It is important that it is not too long, so it is worth preparing a few shorter ones in advance and then choosing the one that presents all the necessary elements in a nutshell. It is worth focusing on such elements as: project description, management staff, competitive advantage, market characteristics, the most important information related to the project's finances, as well as strengths and weaknesses. It should be remembered that there will be time for components such as a business plan or a longer discussion of the idea.
What should be understood by experienced staff? Comprehensive knowledge of a given issue as well as brevity are not enough. You have to make yourself known as a passionate person who knows what he wants and is sure that his project is right. Appropriate body language, enthusiasm emanating from our speech and an optimistic attitude can often overshadow the imperfections of the presentation. Let us make ourselves known as people who, even in spite of a little experience, radiate the upcoming success. Investors often pay attention to the candidate's profile, his commitment and passion. It is a good idea to train a speech, e.g. with people close to us, in order to get used to the first conversation with the investor.
If we follow the above tips, our chances in the eyes of the investor may increase significantly. It should be remembered that the second such opportunity will not be repeated soon, so always in the case of a lack of knowledge on a given topic, you should seek help from experienced advisers, and also closely follow the changes taking place on the market. Open-mindedness combined with commitment and self-confidence should help in achieving success and, consequently, in raising capital from a Venture Capital fund.