As most start-ups would know, seeking funding is critical for launching a business and venture capitalists can play a key part in this process. Between 2013 and 2014, a total of $18,514 million was committed by investors according to the Australian Bureau of Statistics, with 73 per cent of this amount sourced domestically.
Such significant amounts of funding offer great potential for start-ups to strategically approach investors and sell them on the idea of their business. With this in mind, this article provides some tips for approaching venture capitalists and managing the process.
The pitch process
Starting a business requires careful planning, yet sometimes even the best laid plans don’t progress very far without a solid pitch to inspire financial backing. Developing excellent communication skills goes a long way for pitching the ideas and products to venture capitalists.
Venture capitalists are often a group of professionals who are usually industry experts, successful business leaders or investors willing to back the start-up with significant funding – provided they believe in the idea. Therefore, the pitch is in many ways the bread and butter of a start-up.
“Business opportunities are like buses, there’s always another one coming.”
– Richard Branson.
Public speakers finesse their skills by pre-preparing key points and practising delivery in front of an audience, and then take on board feedback to refine their speech. Adopting a similar method before meeting with the venture capitalists is recommended. Start by pointing out the value of the idea, as time is a limited resource and establishing the worth of the concept immediately can help win rapt attention.
It can be beneficial for CEOs to bring one or two staff to the meeting, to present a collaborative approach as venture capitalists invest in teams as opposed to individuals. Delegating segments of the presentation to the staff responsible for that project also helps. Rehearse the presentation as a team.
Ultimately, it is important to maintain an optimistic mentality. Having a steadfast belief in the business’s core offering or innovative idea shines through in a pitch, and shouldn’t fade even if ‘no’ is heard a few times. Richard Branson famously said “business opportunities are like buses, there’s always another one coming” so keep boarding the bus.
The legal process
Throughout the launch and growth stages of a start-up, expert commercial lawyers can offer customised tax and corporate advice. One of the key components of this is venture capital, and commercial lawyers can assist with documentation such as informal offer documents, registered offer information statements and registered prospectuses.
Showing venture capitalists that the start-up has its ducks in a row and uses the proper legal channels in each step can help cement a good first impression. Moreover, given that commercial lawyers can draw on years of experience working with start-ups from a vast array of industries, consulting with them helps to construct a bespoke plan for attracting capital.