Here’s how to go about raising VC funding
Amidst the economic slowdown across multiple sectors in the country due to the advent of the global pandemic, VC or Venture Capital funding remains a stable source of capital to support and nurture startups. Entrepreneurs are known to rely on VC funding as they are available with funds essential to grow as well as succeed -even if it implies separating yourself from a part of company equity.
The overall mentorship, expertise, guidance, and infrastructural support available with a typical VC deal will help significantly in growth, expansion, and scale-up in the desired sector within a short period of time. However, this also implies that raising VC funding for startups is not an easy feat as most VC firms seek a fair amount of return out of the deal. Therefore, to avail services of venture capital, it is important to know how to raise venture capital for small businesses in India.
Finding the Ideal Venture Capital for Your Startup
Are you launching a business? Have an interesting idea in mind? Need capital or funding sources to finance the same? Funding will help in fulfilling your business initiatives while creating a strong base for ample growth and success. Still, finding sources of funding can sometimes be challenging.
Here are some useful tips for startup founders who are planning to raise venture capital:
#Analyzing the Suitability of Your Startup to Venture Investment
Most startup founders assume that their ideas are attractive while deserving significant financial backing. However, it is far from reality. Not all businesses can benefit from a venture investment.
You are expected to ensure the right timing for funding your business. At the same time, it is also important to know that your business is VC-backable while meeting the revenues and growth requirements of potential investors. Mostly VC funds are difficult to get if your business does not promise at least a 10X return on their investment. It is here when you decide if your startup needs a heavy investment from VCs or relatively easier revenue-based funding.
Usually, VCs or Venture Capitalists seek highly scalable businesses along with a well-defined exit plan. Moreover, the founders of the company should also be willing to offer a major chunk of the respective owners to the investors. You should ensure that your startup is meeting the criteria defined by VCs in your industry. Also, pitching the VC funds sometimes is a long tiring process. You can rather apply for revenue-based financing online, to get the investment without losing any stakes in your company. Thus, you need to carefully understand which type of financing model will work best for you.
Effective networking is crucial to the overall success of any startup company. It is also pivotal for fundraising opportunities. You can look forward to leveraging core business relationships towards linking up with prospective venture capitalists.
An effective method is to ensure a warm introduction of your startup to the VC through some mutual network. Usually, VC stalking or cold emailing are not regarded as professional ways to reach out to a potential VC. Rather, a trusted and professional connection source can help in improving the confidence of the venture capitalists as they go ahead with backing your business idea.
#Assessing the Requirement for Capital
You should be capable of determining the exact amount you would like to raise with the help of venture funding. You can start by preparing an in-depth business plan to specify the amount you aim at seeking from the VC.
The amount of investment you require for your startup will help in figuring out how to pitch to a venture capitalist and when to do the same. You are also expected to identify essential parameters that you wish to fulfill with the help of this funding.
#Doing Research for the Fund Size
All VC firms out there tend to feature a unique model for operation as they invest in niche-specific industries or businesses. You can look forward to identifying the right size of your investment fund. Moreover, you can also go ahead with finding the average check size the firm usually issues.
As you figure out the exact fund size, it will help you in targeting venture capital funding out of the investors who are willing to fulfill your capital funding request.
So, to infuse new capital into your startup business, you may choose to go for revenue-based financing or venture capitalist funding, or an angel investor, looking at the suitability of your business. With the right steps, you can grow your startup business to gain improved profitability. Get in touch with the most reliable financing partner- velocity to get the best-suited financing solutions for e-commerce brands.