Finding investors for your business is extremely difficult. Don’t get me wrong, it is not impossible but it is not an easy layup. It is a lot harder depending on your industry (i.e. consumer products) and easier in others (i.e. technology). But you know what they say, “Nothing worth having comes easy.”
Venture capital is synonymous with Private Equity. “PE” is usually associated with funds reserved for mature, revenue generating companies that might be in need of a little resuscitation to become even more valuable. On the flip side, venture capitalists are generally focused on younger companies that might be unproven in their industry but have the potential for growth.
Competition for investors’ dollars is cutthroat with many firms investing in less than 1% of the 1000s of companies they evaluate. So how can entrepreneurs maximize their opportunity to raise capital? Check out these three major rules to the game.
Know the investment firm. Understand the firm, do research on the leadership team you will be meeting with and have a handle on what the investors are likely to invest. Knowing the typical range of investment dollars a firm will fund a company will provide you with a realistic plan.
Competition is expected. Competition is good. Even if you sell very unique products, it is very narrow-minded to think that you don’t have any competition. The marketplace is large and you are almost always competing with someone. Paying attention to your industry and the vast marketplace means understanding who you are competing with. Do not tell a potential investor that you do not have any competitors. Believing you have no competition is naive and dangerous.
Be persistent; keep your messaging clear, and work hard. There is no substitute for hard work and dedication. Be flexible in your approach to fundraising and understand that it takes practice.