Venture Capital Basics
Did you know, there
is more money looking for
a "good deal" than there are "good deals" looking
It's a matter of learning how to access capital sources,
preparing the required documentation (five key documents), providing answers
to the six questions all investors will ask, and addressing four critical
Associates specializes in assisting entrepreneurs and startup companies
obtain financing and developing into profitable enterprises.
and Financial Angels
Market your venture to potential investors as a financial package rather
than product or service to a consumer.
A good business plan is the
key to obtaining funding. The goal of every business plan should be
to address the concerns of the investor: upside potential, downside
risk, management, potential dilution, and liquidity issues.
for Investment Capital
are constantly comparing one investment against another and ranking
them in numerous categories.
Evaluate Your Own Project
Venture Planning Associates recommends that entrepreneurs
put themselves in the place of investors, who want to know the answers
to these six questions:
What Every Investor Wants
to Know (6 key questions)
How Much Can I Make? (40% ROI expected)
How Much Can I Lose? (All of it plus any loan
guarantees, law suits, time)
Who Says This Thing Will Work? (Third party verification
of all business plan items)
Who Else Is In The Deal? (The management and investment
team and their qualifications in this field)
How Big is the Market, and How Will the Company Reach
the Clients? (Verification of marketability)
How Do I Get My Money Out and When? (Exit strategy
for IPO, Acquisition or Merger)
How to Hold Investor Interest
Having top quality
documentation increases your chances of attracting and holding investor
interest. These five documents are essential:
Executive Summary. 3 - 5 pages.
Business Plan: 50 pages maximum, and focused on the
Due Diligence Material, including Market Studies,
Research Papers, Patents, etc.
Business Valuations Company and investor pre- and
To sell minimum shares for maximum dollar investment.
Management factors most
critical to investors
Can the team maintain a sustained effort? 67%
Does the team have extensive market familiarity? 67%
Is the entrepreneur a leader? 31%
Can I get at least a 10 times ROI in 5 to 7 years?
For a complete list of criteria see
Venture Capital Report #7
Enhance your chances for
funding. Know what business you are in!
Are you in Research and Development (R & D), Manufacturing, Distribution,
Sales or Service? Each phase of business has its own financial dynamics,
and you usually cannot be in all phases at once.
Have a well rehearsed
and polished presentation
Remember that you are a "Salesman" for your business first,
and a "Techie" last. You are selling the five items listed above,
not your product or service. We provide complete Power Point presentation
templates as part of our reports.
Develop a targeted list
Develop a list of private investors,
venture capital firms, and target joint venture companies. Click here
a Report on how to locate and attract Angel Investors.
Be Patient and Stay Focused
Do not rush the investor! Be patient, and do not expect
much positive response for three to six months in some cases.
Keep your eye on the goal of lowering perceived risks
to the investors, not the obstacles of how much and how soon you need
the capital infusion.
Our Best Advice to Entrepreneurs
Learn to sell, face-to-face, one-on-one.
Not just your product or service, but your entire business vision.
Buy an HP 19B or equivalent financial
calculator, and become proficient in all aspects of finance for startup
Surround yourself with a quality team,
build your network in sales, finance, management.
Take a public speaking course and
learn to give tight presentations to tough audiences. Try Toastmasters,
Rotary, or Junior Achievement, etc.
Learn how to do the due diligence
on those "too good to be true money sources".
goal is to provide you the best funding tools available and to get your
Venture Planning Associates,
of the hundreds of sites offering business plan products and services, your VenturePlan
site is among the best, if not the best. "
Mike Rischard CPA, President, Agilecor
we received first round funding ($5 million) the VC firm asked us to show
how our financial models were created. They wanted to use OUR TEMPLATE (which
we developed from the 7 Venture Capital Reports) to help them evaluate alternative
scenarios for their portfolio companies!" Michael
.Lay, CFO, e-Commerce Internet Company
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