Prospecting for a Venture Capital Investor

Unfortunately, you need to understand the realities:

  • Most new ventures fail. (We know, you’ve heard that already countless times.) They are inherently risky. You are risky. (Sorry.)
  • A major reason why most new ventures fail is that they are unable to raise the capital needed to buy time in order to fix problems and get all the pieces right.
  • Discerning professional venture capitalists see roughly 100 proposals for every one they accept and invest in.

Yikes! It sounds impossible. Sorry for the cold, wet blanket.

Now for some good news. Securing the funds you seek will be hard, but it’s not impossible. Those few who really understand the importance of risk capital, where to find it, and how to get it significantly enhance their chances of being among the survivors, building a successful company, and creating wealth.

Actually, Lots of Sources and Lots of Available Dollars

. . . There are 500–600 bonafide venture capital firms in America. Also, the angel groups might be appropriate for you at this point as well. Net, there are a lot of potential sources of the funds you need.

It is unlikely the venture capitalist will risk his investors’ money on your venture unless you, your idea, and your potential company have substantial venture capital appeal. Here’s what you’ll need for that appeal:

  • Have a good and hopefully sufficiently unique idea with the potential to make a lot of money.
  • Be willing to give up a good portion of the return on your idea and efforts to compensate the venture capitalist and his investors for the risk they will take.
  • Want to build a BIG successful company—at least $50–$100 million in revenue with a substantial profit margin.
    Be able to accomplish those results within five to ten years.
  • Be willing to accept and work with the venture capitalist as a partner. (Remember, you couldn’t pursue your dream without her money.)
  • Know your high growth potential business domain very well, have already attracted the start of a talented supporting cast, and be capable of attracting other talented players as the needs of the business grow.
  • Be willing to provide your venture investor with a viable exit for his investment within five to ten years.

This book will help you get your act together, take it on the road, and return home with the capital you need.

 

Len Batterson is the co-author of:
Building Wealth through Venture Capital: A Practical Guide for Investors and the Entrepreneurs They Fund