Tuesday, 29 September 2015

What Investors Look For Prior To Venture Capital Financing

Venture Capital Financing 
That awesome moment when no one is showing confidence in your startup and then suddenly you find a venture capitalist ready to invest in your seed stage startup and enable you to turn your dream into reality! Wow! It’s a dream come true! But wait, attracting a VC for venture capital financing isn’t a game either.

As per researches, out of 100 startups, VCs usually select only 2 or 3 so you can easily figure out the toughness of the financing option. That said, if you have all the necessary things in the right place, you will always find it easier to grab the attention of a venture capital firm. Below are the most important factors that VCs take into consideration before investing in your business.

Most Important Aspects That A VC Would Look For In Your Startup

A Unique Idea

Your idea is the first thing that will catch their attention; if they find it interesting, innovative and competitive, they will definitely value it highly. Venture capital firms, typically, prefer to invest in high potential ideas which can be a product or service with huge demand in the market. You don’t have to create something completely new; even an innovative twist to an existing product or service can also bring in potential customers. This is the first thing that a VC would look for in your venture.

A Strong Value Proposition

Any business has to have a unique selling proposition that can compel customers to switch brand. If you can demonstrate to your customers why exactly a customer would buy your product/service, it is a win-win situation almost. You can create a superb working model of your business and bring in a set of beta customers to demonstrate market traction.

An Excellent Team

To implement and execute a brilliant idea, you need a brilliant team which is the next biggest requirement for attracting venture capital financing. Try to assemble the finest of finance and management experts for your leadership team as these experts are ultimately going to execute your idea and give a definite shape to your business. A smart, intelligent, innovative, committed and honest team can significantly increase the value of your startup so try to arrange it as early as you can.

Other Interested Investors

VC funding is very much based on demand you can drive for your startup among other investors. These investors would feel more interested if there are other investors standing on the line for your idea. This gives them the assurance that your idea is in demand and there are good chances of huge revenues. If you have more than one active investor for your startup, it is great achievement as you don’t have struggle much to prove the authenticity and potential of your business.


Try to ensure that all the the above aspects of your business are in the most desirable state so that you can easily convince a VC to think about your startup. Moreover, if you can bear 25 to 50 percent of the investment through your personal savings, it is undoubtedly be a head-turner for the investors. If that sounds impossible, then at least 10 percent is also good enough to prove your confidence in your startup. Money is there, all you need is to be present at the right place at the right time with the right set of things.

For more information on venture capital financing, feel free to visit http://mergeralpha.com.

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