How to Find an Angel or Venture Capital
When you think you are ready, how to find angel or venture capital becomes your big question. The answer is really very simple, but the most important issue is….are you really ready?
Before you even think about how to find angel or venture capital, it is important that you are prepared. It is not enough to merely have a good idea. What you need is a business plan, and in most cases, you need to have begun the actual implementation of that plan. One important decision that must be made is your willingness to part with equity in your own organization. Although angel investors tend to insist on a bit less control than their venture capital fund manager counterparts, surrendering of some control and equity is going to generally be part of the package.
This is really a two way street. The angel or venture capital investor will usually bring what is known as value added investment to your business. This means that a great deal of experience and managerial skill, and also, possibly, a support network will suddenly become an asset of your company. Still, most entrepreneurs will have exhausted all other sources of funding before even beginning their search for venture capital. It is during this process that they generally learn that traditional lending institutions rarely see a good idea as viable collateral.
The angel or venture capital investor, on the other hand, sees good ideas as potential sources of high return in today’s volatile marketplace. So, when you are ready to begin your search for one, the first step is to put that good idea into a business plan. Do the work to prepare a presentation that will cover all the bases. It is true your investor will dig even deeper after your presentation, but this does not mean that your plan should not be as exhaustive as possible. This is the true key to finding venture capital. Convince the investor that your idea is workable, and they show you how to make it even better.
When you have your business plan prepared, you will then need to find the angel investor or venture capital firm and get them interested in hearing your presentation. This is not difficult today thanks to the internet. 90% of the preliminary legwork can be done from your desk. The main goal is to find two or three firms or investors that might have an interest in the type of business your venture represents. You will want to avoid the “hat in the hand” defeatist approach. Remember, the best way to sell your idea or business to a venture capitalist is to convince them that you are going to make a lot of money, but with a little bit of help, you could make a whole lot more. This is what will attract them.
Entrepreneurial confidence is a major factor in the securing of venture capital. It is true that venture capital is used for high risk/high return ventures, but it is not the entrepreneur who should be shouting loudest about risk. There will be plenty of candidates for the job of pointing out risks. The entrepreneur must approach his search armed with a plan that shows how the risks will be overcome or minimized. His presentation should be complete and fair, but should also show how increased revenue and profitability will be insured by the infusion of capital.