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Venture Capital Basics
and
Business Development
Did you know, there
is more money looking for
a "good deal" than there are "good deals" looking
for money?!
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 management factors.
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Entrepreneurs and Startups
Venture Planning Associates specializes in assisting entrepreneurs and startup companies obtain financing and developing into profitable enterprises. -
Investors and Financial Angels
Market your venture to potential investors as a financial package rather than product or service to a consumer. -
Your Business Plan
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. -
Competition for Investment Capital
Investors 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)
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How Much Can I Make? (40% ROI expected)
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How Much Can I Lose? (All of it plus any loan guarantees, law suits, time)
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Who Says This Thing Will Work? (Third party verification of all business plan items)
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Who Else Is In The Deal? (The management and investment team and their qualifications in this field)
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How Big is the Market, and How Will the Company Reach the Clients? (Verification of marketability)
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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:
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Executive Summary. 3 - 5 pages.
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Business Plan: 50 pages maximum, and focused on the above questions.
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Due Diligence Material, including Market Studies, Research Papers, Patents, etc.
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Business Valuations Company and investor pre- and post-investment values.
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Deal Structures To sell minimum shares for maximum dollar investment.
Management factors most critical to investors
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Can the team maintain a sustained effort? 67%
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Does the team have extensive market familiarity? 67%
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Is the entrepreneur a leader? 31%
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Can I get at least a 10 times ROI in 5 to 7 years? 28%
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 of investors
Develop a list of private investors, venture capital firms, and target joint venture companies. Click here for 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
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Learn to sell, face-to-face, one-on-one. Not just your product or service, but your entire business vision.
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Buy an HP 19B or equivalent financial calculator, and become proficient in all aspects of finance for startup companies.
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Surround yourself with a quality team, build your network in sales, finance, management.
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Take a public speaking course and learn to give tight presentations to tough audiences. Try Toastmasters, Rotary, or Junior Achievement, etc.
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Learn how to do the due diligence on those "too good to be true money sources".
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"Our
goal is to provide you the best funding tools available and to get your
project
funded quickly."
Bill
McCready, CEO
Venture Planning Associates,
"Out
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
"When we received first round funding ($5 million) the VC firm asked us to show them 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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