If you are launching a startup, it is extremely difficult to fund everything without partners. There are many different avenues you could take to find funding. A great fit for startups are venture capitalists (VCs). The number of investors that you need to approach and the things that you may plan on talking with them are some things that might be running in your mind as you consider the prospect of VCs.
People have different perspectives on the best methods that you can use. Many people prefer the shotgun approach. In this particular method, the main idea is to pitch to as many investors as possible. Now, most of the startups feel that this is the right way to become successful and gives the best odds of getting the funding that is necessary.
While there are many different notions that are prevailing in the startup world, here are some simple guidelines that will assist you in making that perfect pitch.
Find A VC Who Matches Well With Your Company
You need to remember always that one good investor that matches well with your firm is better than a 100 investors that do not. It is true that the venture capitalists main job is to filter out companies that they do not see value in investing in. They only back companies that they think will succeed. Of course, it is one of the most crucial parts of their process.
But your company also needs to filter out the VCs that do not seem to be the right match for your company. It is necessary for you to realize that you need a VC’s help beyond them signing a check. A good VC who understands your business well will give you appropriate guidance and assistance. Their insights will be quite valuable and can help you become successful. Money is not the only criteria that matter when you are searching for a VC.
Unfortunately, for most startups, raising money is the only thing that runs through their mind. They do not see a larger picture because they are blinded and want to seize any opportunity that can help them in getting the necessary funds.
Search for the Right Investor
When you find the right investor, you are going to have countless benefits apart from getting the required funds. Not many are aware of the advantages that they get to enjoy by choosing the right one. Here are some of the most excellent benefits:
Expand Your Network
Yes, when you are using the right VC, one of the first things that you will be able to do is to expand your network. A good investor does more than give you a check. They want to help the business grow and prosper as they believe it is the only way for them to succeed as well.
As a result, they will not hesitate to introduce you to their high-level connections. In case you are going with a VC that has no contacts in your industry, the chances for you to expand your business are fewer. They might not be of any value to you.
Fits Your Culture
Now, this is the immediate next thing that you need to check when you are selecting a VC. They need to resonate with and embody the values as well as the ideas that actually drive your team. If you do not check this aspect when considering a VC, you might end up in friction down the road which might not be a good thing for your company.
Countless companies have compromised on this aspect and as a result, failed. You want the VC who is going to fund your company also to have an interest in your firm.
Consider the Vertical Experience
Finding a VC who has good knowledge and experience in your vertical is going to benefit your company. Now, they might be one who can align well with your company’s strategy. They can provide you with advice and insights that are valuable.
Most importantly, they are the ones who find value in the products and services that you offer. They can track the various opportunities that are available in the market and introduce the same to you. Now, this is worth more than gold.
Know Their Bandwidth
Some of the VCs are very successful, and this is reflected in the fact that they have a large portfolio. While it is something that the VC might be proud of, it may not be something that should attract you. Since they have so many things on their plate, they might not be that interested in providing the influence and insights to your company.
While you might not need constant care and nurturing, you do require a VC that can engage in your operations to a certain degree. If a VC has absolutely no time for your company, though they might be great, they might not be the right fit.
It is necessary for you to chase quality instead of quantity when you are searching for a VC to fund your company. The benefits are going to be 10x when you find the right one. By using the shotgun approach, you are going to waste your and their valuable time. Always be targeted to succeed in finding the right VC.