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Venture Financing: Five Strategies For Today’s Tough Times that Raise Money Fast

Venture Financing: Five Strategies For Today’s Tough Times that Raise Money Fast

Venture capital financing is one way that businesses can raise lot of money in a short amount of time. While venture capital funding has decreased due to the recession, there is still plenty of capital floating around. According to PwC’s latest MoneyTree Report, venture capital firms funded 906 deals in the second quarter of 2010, investing a total of $6.5 billion. By following these five strategies for raising venture capital funds, you can impress your potential investors and get your share of the billions in funding.

Provide a business plan – Too many business owners never feel the need to create a formal business plan. Sure, they have goals and strategies for the business, but a venture capitalist needs physical proof that you have plans. Truthfully, many venture capitalists won’t even read through the entire business plan, but they will feel more comfortable knowing that you are prepared and have thought through every aspect of your business.

Keep abreast of the venture capital market – The best way to understand the mood of the venture capital market is to actively do research about the different firms, funds, and the companies that are currently being funded. Keep up with the news surrounding the industry, and when you hear that a new $1 billion fund is being launched to specialize in your industry, you will be able to effectively target the firms that are already interested in you.

Be truthful about your company – Every company has some risks and poor qualities, whether the risks are related to management, cash flow, macro economic factors, etc. Venture capitalists are professionals and can see through any attempt that business owners use to make investors believe that a company has more opportunities than truly exist, and less risks than really exist. Be honest.

Grow your network – The venture capital community, despite its large amounts of capital, is a relatively small network of firms and individuals. By meeting and impressing one VC firm, you may be able to be introduced to another individual at another firm. These tightly knit VC groups have the potential to grow your network exponentially.

Do not waste anyone’s time – Venture capitalists are strictly business (during business hours). When you send them a summary of your company or make a presentation, be succinct and powerful. Make every word count, and you will be appreciated and gain a good reputation. The networking strategy above can work against you—if you gain a bad reputation for having too much to say and little substance, you will be shut out of the network.

If you use these five strategies, you can build yourself a great reputation inside the close-knit world of venture capital, and get the funding you need fast, regardless of the external economic environment.


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