So far, you’ve worked hard to get your startup past the early stages, and you now have a proven product, a solid user base, and a consistent revenue stream, but all you need now is a venture capitalist or venture capital firm. However, this stage presents a unique set of challenges that many entrepreneurs have not yet encountered.
Searching for the ideal venture capitalist can include a number of different aspects, ranging from cultural fit and interpersonal dynamics to sector expertise. Setting aside time before your “formal” fundraising efforts to complete your research, establish discussions, and refine your pitch is one method to increase your chances of choosing the right business.
Here are some tips to help you find the perfect VC for your company:
1. Find venture capital firms that invest in your type of industry.
Look for firms that have a track record of investing in your industry and have funded companies with revenue growth and product emphasis comparable to yours.
Make a list of venture capitalists who are likely to be interested in the type of deal you’re providing, both in terms of industry and product. This can help you provide better clarity and insight into where your company belongs within those categories, preventing misunderstandings and potential mistakes during outreach.
2. Create a targeted list of VCs and firms.
Once you’ve determined the industry and product type, start compiling a list of potential VC partners. Do extensive research to develop a list of VCs interested in your industry as well as product focus; look for firms with a track record of investing substantially in startups similar to yours (in terms of revenue growth/product focus) before contacting them directly or sending emails.
3. Check out past deals and their stages of investments.
Evaluate the types of investments they make and if your company is a suitable fit. Most VCs and firms are open about their investments, and you can find this information by checking their websites.
Some VCs’ websites include an investment criteria page that defines the types of companies they target for early-stage funding: “innovative” and “expanding.”
4. Consider the location of the VCs and firms.
Identify VCs who are geographically close to your company’s office. Some companies are willing to invest outside of their city or state, while others exclusively invest locally.
If your product or service has broad potential appeal, this may not matter as much, but it is worth double-checking before contacting VCs.
5. Contact your target VCs.
You’ve made your final decisions, and the target list is ready! It is time to start setting up meetings. You can achieve this by securing an introduction through a mutual connection in your network or by sending a cold email.
Reaching out to them might entail sending emails with broad information about your organization that is applicable across all sectors. Make each email you send to each partner or firm unique. Get to the point and explain why your firm is important to the particular VC.
It’s finally time to meet with the VC! Well done!
This is your opportunity to pitch your big idea and seek investment. VCs are constantly seeking new and innovative products in which to invest, and this meeting might provide them with the information they need. This pitch should include information about your company as well as specifics about the product or service you are providing.
This meeting will not only assist you in generating attention, but it will also ensure that there are specific reasons why they should select your company from over a million others. Best of luck!
GetFundedAfrica is building Africa’s largest tech-enabled marketplace which connects African founders with global mentors, coaches, corporates, investors and government. Whether you want to raise funds ranging from $100k to $50m or you simply want to grow your business, sign up for free at www.getfundedafrica.com