You’ve launched your business, expanded and are now looking for investment for growth. So how do you approach VC investors, what do they look for and how do you convince them to back your business?
VC investors can, of course, provide a cash injection, but they also have the potential to provide much more. The right ones can be invaluable in building strong management teams, steering rapid growth and establishing strategic relationships.
VCs tend to specialise in specific sectors so take some time to research the market for those investors that are in your space. It is also worthwhile identifying companies that they have already invested in.
When meeting the VC, provide useful information such as market size, strengths and weaknesses, cashflow predictions, growth potential and your plan going forward. Compare yourself to the competition and illustrate why you are more efficient and profitable. Good questions to ask yourself are:
- What problem are you trying to solve?
- Who is your target market?
- How big is the market
- What are your USPs?
The presentation should be engaging, but concise. Don’t go overboard with slides and data.
Remember that investors will be analysing you as much as the numbers. VCs like to be involved for the first few years so are assessing whether this is a relationship that could work. Are you investable?
Equity v investment
Good news; the VC is going to invest! Be clear in your own mind how much equity you believe the investment to be worth. Are you willing to take less investment to maintain more of your own equity? Time will be of the essence on the day and you won’t have long to make these decisions so is it vital that you have thought this through beforehand.