As a “recovering” investment banker and billion-dollar dealmaker, Carol has helped a lot of companies get funding. She shares some of her best advice in this post, “5 Things Your Business Should Do Before Talking to Venture Capitalists,” on Bank of America’s Small Business Community site. Carol begins:
“One of the biggest issues facing entrepreneurs is how to fund their businesses, particularly in the early stages of growth. This leads many to consider venture capital. However, the process is not easy.
Here are five things your business should do before talking with a VC.
1. Make sure your business is VC-fundable
While venture capital gets a lot of space in the press, it only funds a fraction of a percent of businesses each year. Venture capitalists (and the “angel investors” that precede them) are looking for big, scalable opportunities. So, depending on the industry, if your business isn’t going to get to at least $50-$100 million or more in the next 3-5 years, don’t be surprised if the venture capitalist doesn’t want to talk to you.
This is also why VCs tend to disproportionately fund industries like tech and biotech. For industries focused on the consumer, they tend to come into the funding cycle later in the process.
2. Refine your business plan and deck
While your business plan or pitch deck won’t alone get you funded, it acts much like a resume does in a job interview – it helps get you to the next level. Make sure you can clearly explain what problem your business is solving and why your team is the best suited to solve the problem. Clearly communicate your business model and why your approach is better than the competition (whether direct competition, indirect competition or competition that may come down the road). Address and overcome the key objections an investor is likely to have. Explain the milestones you have achieved, what you will achieve with your capital infusion and the scope of the ultimate opportunity.
Doing this slickly and concisely, with graphs, charts and bullets is the current trend for frequently approached investors with short attention spans.”
You can read the rest of this post here.
And for more posts from Carol, check out her contributions to the Bank of America Small Business Community.