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Some common tips:
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VC Enthusiasm
It is your job to be enthusiastic about your product and business idea. The Venture Capitalist shopping your business plan to potential investors must be sceptical, review and verify every angle of the venture to be able to satisfy any questions and concerns a potential investor may bring up.
The Venture Capitalist puts their name on the prospectus to the investors and must ensure all information is solid, well researched and verified.
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Cost
As much as any Venture Capitalist and Investor may appreciate your business idea and product, in the end the main motivator to invest in your business is the expectation for a reasonable Return on Investment (RoI).
For the same reason, services provided by MTM are not free; we need to believe in your product to successfully solicit funding for you, but we expect to be adequately compensated for our efforts and the use of our established contacts in the financial industry and VC circles; compensated with equity in the new venture upon successful funding, and with a retainer fee during the process of soliciting funding, to cover our expenses.
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Be Prepared
Have as much information as possible consolidated, before you contact us (or any other VC). It will save you time and money by being able to present an plan with solid backup, minimize research efforts, and shorten the time to go to the capital markets for the funding.
As a general guide line, put yourself in the position of an investor and think which question this investor would have about your plan, and be ready to answer these questions.
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Expectations
Your product/business plan, the type of investor solicited, and the current market conditions are the critical factors to establish reasonable expectations for the time it takes to raise capital.
In a slow economy with losses or slow gains in the stock market you can expect investors to be generally reluctant to place funds in new businesses. Even a well-presented prospectus with an excellent ROI outlook will take time to fund.
The type of investor solicited also makes a difference in the time line. Institutional investors have to go through a routine of due diligence which extends the time to funding; individual investors with money available are in a position to react quicker if the opportunity is validated.
A hot product/business plan is obviously easier to find funding for than a complex venture, or a solution which is not easy to distinguish in the market and requires more explanation.
These tips are provided to set realistic and appropriate expectations. |
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