These days, you need money to make money. There are a plethora of companies with potential out there, but a good amount of them will fail before they ever get off the ground because they won’t get funding. These companies will burn through the cash that they have on hand before they’re ever able to make their first sale. It’s unfortunate, but it’s the way the world of entrepreneurship works.
But often times, those companies don’t need to fail. If they follow some of my advice they’ll be able to secure some venture capital funding and (hopefully) even get their companies to profitability and make themselves (and their investors) some money.
Keep in mind that venture capital is NOT for every company. Some companies are in industries, or have the connections, where they will be just fine without any money from investors. But, in many cases, a boost in capital is necessary for companies to succeed.
1) Go Where The Money Goes
Do you enjoy being the only startup company from your hometown/university area/etc.? That’s all well and good but unless you’re located in a place where venture capital is prevalent then you may need to move the business to attract some cash. Lots of VC firms (and investors in general)
2) Focus on Your Team
At the very early stages of your company, you’re not going to have much of a product to offer (most of the time). The people that are going to invest in your business are investing in your TEAM just as much as they’re investing in the company itself. Ever hear of grit? It’s the characteristic that distinguishes many successful people from unsuccessful ones. Show potential investors that you and your team have what it takes to bring your company to the top.
3) Get a Mentor
But not any mentor will do. You want to find someone who has experience in bringing a company into the world and will actually have legitimate advice for where your company is. It might be tempting to reach out to a Fortune 500 CEO to be your mentor, but did s/he actually build up a company like you’re trying to do? Will they have useful advice for you as your continue down your path? These are questions you need to ask before choosing your mentor.
If you think that everyone who has ever built a company has ever succeeded then you need a reality check. Actually, most people fail. The key is to fail quickly so you can decide whether and how to continue. Functioning under the assumption that you’re never going to fail is actually a recipe for disaster. Not that you should plan on failing, but you shouldn’t get disgruntled if you do. Pick yourself up and continue on.
5) Talk the Talk
I’m not saying that you need to have your MBA in order to run a company (trust me, you don’t) but you should be able to hold a conversation with those who have one. Burn rate, margins, profit vs. revenue, etc. These are terms that you need to learn about in order to adequately sound like you know what you’re talking about. It might also be a good idea to learn how these key terms figure into your OWN business so you’re not just talking about definitions in generalities.
These five steps are a great introduction into the world of Venture Capital and will give you a better idea of how to succeed in this unique and sometimes scary world. Best of luck!