Securing investment from a VC isn’t just about a simple transfer of funds.
Securing funding and putting together a team of employees and investors that work well together is a crucial first step for any growing business. Finding the right investors can also be one of the most difficult tasks in the early stages.
1. Find a VC who cares about the specifics
The best venture capitalists are experienced at weighing the reality of the plan against the generally unknown promise of the team composition.
While the feasibility of the plan can be measured against the sectoral landscape, the readiness of the product, cash management and the market timing, the readiness of the team is less clear to the VC.
A good CEO of any startup, by virtue of being a leader, should have assembled a team that is capable and committed to delivering on each aspect of the plan.
In the early stages, experienced VCs will therefore place a lot of focus on the CEO’s ability to effectively lead their team in a way that’s likely to bring out its strengths.
Ultimately, as a business, you should make every effort to find a VC who delves deeply into the specifics, looking not only at the readiness of your product and the market, but also at the team you’ve put together.
2. Don’t miss deadlines
A VC is looking for talent that can deliver on pre-agreed plans.
Any good VC will be able to assess your capability very quickly, even if it’s something as simple as asking a startup for some additional information and agreeing on a date by which to provide it – don’t even think about missing this deadline.
The VC will want to see that the delivery date is met. After all, nobody likes to deal with a person who fails to meet pre-agreed deadlines.
No matter how small or insignificant something seems at the beginning, make sure you don’t overlook it. It’s often the ‘little things’ that send the biggest messages to a VC.
3. Get the right balance in your team
Team composition is crucial. In addition to finding a group of people who gel together well, think about the specific talents of each person and make sure to create the right balance.
If your business requires team members to have deep technical knowledge, be aware that people who do have technical expertise can often be more interested in making things than selling things.
Therefore, a technical innovator usually needs to attract a complementary sales capability.
On the other hand, if yours is a business where sales are automated, like an online travel-booking site for example, then a “marketing-led CEO with complementary technical ability” is what’s required.
In other words, make sure you and your team members have just the right amount of capability in all areas you’re going to need to display it. Finding the optimal balance will enable you to grow and reach an ever-widening market scale, Smyth said.
“It’s all about good leaders surrounding themselves with contrasting talents and empowering those talents to deliver.”
4. Seek the help of external advisers
Good leaders are not only able to acquire and manage an effective team, they’re usually also adept at finding good external advisers to guide them through the process of growing a new business.
Seek out people you can trust to help see you through the various pitfalls that can occur while getting a business off the ground.
5. Treat the relationship as a partnership
Securing investment from a VC isn’t just about a simple transfer of funds. It shouldn’t feel the same as simply being granted a loan from your bank, so don’t treat it that way. Treat it like a real partnership and find a VC who plans to do the same.