In 2015, venture capitalists invested over $58.8 billion in businesses, yet African-Americans only received one percent of venture capital funding. While opportunities to grow small businesses have been scarce in the past, large investors are beginning to dedicate more attention and inclusion to minority commerce that fosters growth and success. This leaves new opportunities for African-Americans to obtain the money they need to reach more customers.
Before jumping into the big leagues of expanding your business and making a global impact, here are seven ways to attract the right venture capital players and stand out from the competition.
Know Your Business
Investors are looking for companies who have studied their market, discovered loopholes and are creating a valuable solution to a problem. When presenting your plans,you must be very knowledgeable of your project and of the venture capitalist industry. Useful websites like A VC and Both Sides of the Table offer practical advice through the lense of very successful startup founders and investors. From the materials used to where investors distribute their money, build your confidence so that no investor will doubt the future of your company.
Research Your Potential Investors
Many businesses fail to receive funding because they simply do not know the investors they are pitching to. Like choosing a college or trying out a new workout, you should not commit until you know that the experience is a right fit for you. Become familiar with the companies, industries and products that your potential investors have already funded. Also be aware of their funding cycle and how much they have already allocated for the year. Need help getting started? Venture capitalist database, CB Insights, partnered with The New York Times to research and publish the Top 100 Venture Capitalists of 2016.
Create Solid Relationships
Business is all about surrounding yourself with key leaders who can successfully support your ideas. After researching the routines of your dream investors, reach out to them to ask for advice and gauge their thoughts on your industry. Creating these relationships will develop trust, find out what they are looking for and provide you an opportunity to make them familiar with your company. Practice your email pitch and never be afraid to contact big investors for what you want.
Build Your All-Star Team
In addition to creating solid relationships, you must build an effective team that knows the ins and outs of your industry. From leadership within your company to an influential board of advisors, having reliable people involved in your organization will make a memorable impression for venture capitalists. To strengthen your knowledge on what it takes to build an effective team, indulge in a variety of leadership books. These tools will inform you on how to attract the right people that will stand behind your ideas and advocate for your mission.
Have a History Report
For small companies who have already gotten a business up and running, it is important to present your accomplishments in the field you represent. Investors want to see that you are profitable and have built a dedicated following that you can influence. Keep costs as low as possible in the beginning and raise a significant amount of capital before reaching out to investors. Besides selling your product, there are many ways to gain funding. Millions of people have supported projects created on Kickstarter and Fundable, platforms that grant anyone the opportunity to invest in your idea. Bringing resources and influence to the table will leverage your credibility, show progress and verify that you are solving a real problem.
Simplify Your Business Plan
Simplicity is the key to portraying a well-organized plan to investors. Common mistakes companies make are presenting jargon that can dilute the message of the organization and complicate the vision of the business. Fortunately, there are many apps that allow you to create a clear and concise business plan that won’t leave investors uncertain of your goals. For example, Enloop is an all-inclusive web program that automatically generates sale predictions and a business plan model, complete with visual graphs and the ability to make reliable forecasts of your company’s future.
Live and Love Your Business
Investing in a business partnership is a lot of risk for both the investor and the founder of the company. When reaching out to investors you have to make sure that you genuinely love and believe in your mission. Your passion should be about providing a need and helping your customers in an unforgettable way. Many businesses fall short because they create a product solely to make money and not to serve an audience. Developing a business you love will draw the right people to take it to the next level.