Warning: getimagesize(): Filename cannot be empty in /home/blackenterprise/public_html/wp-content/themes/blackenterprise/single-standard.php on line 35
Q: I’m looking for venture capital for my business. Is there any advice you can give me that will help increase my chances at getting the funds I need?
–T. Green, Chicago
A: These days it’s especially important to do extensive preparation before approaching venture capitalists (VCs). They’ve been extra careful with their investments since the dotcom crash and the slowing of the U.S. economy and will conduct extra-detailed due diligence on any business before forking over their cash going forward. So, the more information you provide, the better your chances.
In light of that, the first thing I suggest is to be as detailed as possible. Be sure that your business plan clearly explains not only how the business operates but also information on its industry, full rÃ©sumÃ©s of the management team, the business’ marketing plan, growth strategy, and its competition. You’ll also need explicit financial records explaining your profit margins and revenue streams. If your business isn’t launched yet or is unprofitable, explain when you expect to operate in the black.
It also helps to be as analytical as possible. Saying “this has been my lifelong dream” in your business plan probably won’t lure the dollars from the VCs, but a detailed analysis of your business and how you intend to make it work has a better likelihood. Also, be sure to explain precisely how the capital will be spent. Be more specific than simply mentioning that it’s being used to expand or start the venture.
While you’re at it, be sure to read “Mining Venture Capital” (Enterprise, February 2002) for additional guidelines.