How to Find the Right VC for Your Startup?
The technological ecosystem in the Asia Pacific region is still in its nascent stage, which is why fundraising among entrepreneurs is a new domain. The television headlines may send across congratulatory messages to all successful fundraisers, but there seem to be no solid guidelines to get through the entire procedure. There is no manual describing the intricate details of navigating into this world of venture capital.
The commonest mistakes that startups make seem to be reiterative – the belief that all venture capital will be raised equivalently. Most of the founders are so eager to receive money, that they open up their collection pots for anyone who wants to donate for the cause. This causes the gross error of loss on strategic value.
Entrepreneurs need to follow some principles to help with their fundraising procedures. These principles will help them collaborate, find, and succeed with investors – and gain money of substantial worth.
Phase I: Creating a Target List of VCs
Venture Capital firms have their own particular kinds of companies that they seek to invest in. These kinds could be software, AI, product, fintech, green technology companies, etc. So first, find out which VC would want to firm in your company if you aim to become a successful appreneur. Here’s how.
1. Find VCs that want to invest in a company of your kind
List down all such VCs by looking at the history of their funded companies and revenue growth. Try searching on CB Insights, a platform that provides information on active VC firms.
2. See what stage of funding they would give out
Evaluate your business and figure out which stage of funding you belong to. Now from the list of VCs, shortlist the ones that are investing in your stage. You can easily find this info on their company website.
3. Take a look at the VC’s past fundings
If you’re unable to find the VCs that fund in your kind of company, look at their past deals to see which kind of companies they fund. VC firms are generally transparent about the kinds of investments they make.
4. See their location
There are some VC firms that prefer investing in local businesses. See if the VCs you’ve shortlisted fund outside of the state as well if you don’t fall in their location circle.
5. Organize your list
Have at least 20 VC firms in your target list and move on to phase in order to start communication with them.
Phase II: Reaching Out Target VCs
This is the time when you’ll set up meetings to discuss your product or service. There are two ways to do this: either ask a mutual connection to introduce you or drop a cold email to a VC partner.
1. The intro
The best way to approach a VC is to get someone in your network to introduce you with a warm intro. To initiate a warm intro, ask yourself the following questions:
- Does anyone you know have direct contacts at target VCs?
- Do your company’s board members have connections with target VCs?
- Can you use business networking sites to connect with VCs?
- Is there an angel investor that could help move on to the next phase?
2. Sending out cold emails
If you do not have any mutual connections to your target VCs, start cold emailing. It’s difficult to get them to connect with you this way, but it isn’t impossible.
3. Template generation
For cold emails, you need a nice template to compel the reader into opening it. Include critical info about your business and talk about how you’re progressing. Mention why you’re seeking investment. Add stats, client base, and facts to catch the VC’s attention.
If need be, send personalized emails to individual firm partners.
4. Be direct and concise
Don’t include redundant information and get to the point immediately. Your text should be clear and easily comprehensible.
5. The final pitch
If the above steps are executed correctly, you would most probably get a meeting with a VC to pitch your idea for investment. Again, include critical information about your business, the USP, and product/service details in your pitch.
The Bottom Line
Finding the right VC for your business is difficult and takes a lot of effort. But with this targeted approach, it would be no time before you start getting meeting invites from them. It’ll all be worth the effort once your pitch gets you investment.
Stay tuned with AppMystery for more.
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