7 useful hacks to get funding from VCs

Posted on April 19, 2017

There is a lot of buzz around the town that it has grown tougher to get funded, that the market has slowed down, and entrepreneurs are facing ardent competition when it comes to pitching in front of a potential investor. While, a part of it might be true, yet there are plenty of investors out there looking to invest in viable businesses. Thus, we provide you with 7 hacks which will help you to get funded.

1. Be clear about what you want: A venture capital firm does not invest in a start-up unless it finds an exceptional and often rare combination of high growth potential idea, decent market size and proven team. Thus, an entrepreneur shall not haggle with the investor on money, instead he/she must know the exact amount he/she needs, and in which areas the money will be invested in. Oftentimes start-up founders have no idea about where the money will be invested, and why are they trying to get funding. It is a much better strategy to work on your business plan, and see where your firm is headed for the next 12-18 months, work out the finance, and pitch for the exact amount that you need. This will not only improve your confidence while pitching, but would also show the investors that you are passionate about your business.

2. Form a great team: Any investor would look at how well the whole team works together. Always know that there will be multiple questions about the founding team dynamics: How well the team works together? What happens when there is a disagreement on a specific thing? How do you reconcile at such times? Is everyone’s vision same for the company? How would the work be divided? Sometimes investors also ask personal questions about a specific co-founder from other co-founders to understand how well they know each other. Thus, if the co-founders think they shall know more about each other, the right time to do that would be before going to an investor.

3. Find the right kind of investor: There are different kinds of investors in the market, and each invests in different, yet specific areas. Thus, if you have a start-up in healthcare, and are looking to pitch in front of an investor who is interested only in Ed-Tech, you would definitely have a hard time to get funding. It is always a better idea to do your groundwork, and find investors who have invested in the same area as your start-up is in.

4. Presentation, and the way you present it: Presentation plays a vital role in getting funded or getting rejected. Even if you have a billion-dollar idea, but are not able to present it in a clear and lucid manner, you would have a difficult time to get the funding. Thus, it is a good idea to create a presentation with proper flow, well-defined slides. Also, practice delivering the presentation in front of mentors before going for the final pitch in front of the investor. It would also help to get an idea about what kind of questions can be asked during the pitch.

5. Research on when a VC has last raised funds: VC funds that are close to the end of their investment cycle will not be looking to invest in new start-ups, as they themselves have to raise funds. Thus, look for VCs who have recently raised funds as they are the ones who are more likely to invest in new start-ups.

6. Make sure that the focus is on acquiring customers, rather than on inorganic growth: The customer base that a start-up has acts as a market validation of the idea, and also gives the investor confidence when present customers pay for the service being provided by the start-up. Thus, all start-ups should focus on gaining the paying customers, instead of running after investors, as any viable business idea which has the ability to scale will itself get a lot of interest from investors.

7. Be confident and passionate: It can be daunting to stand in front of investors and ask for their money. However, one thing all the investors look for is the passion of the entrepreneur, and how confident he/she is on making his start-up a success. The confidence will only come when you are sure on your idea, have done your research before starting out, and have validated the idea by acquiring a few initial customers. This will also show the investor that you are passionate about the business, and are will work on the start-up, no matter what.

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