February 5, 2024 | 5-minute read (809 words)
Securing Venture Capital (VC) is essential for propelling your business to new heights. It lays the foundation for your firm to grow and survive in a competitive landscape. However, snagging funds for your business as an entrepreneur is not a piece of cake.
According to Exploding Topics, nearly 30% of startups fail despite having VC-backed investments. Such statistics show that it can be risky for angel and VC investors to support a company.
Still, despite facing gigantic risks, VCs invest millions of dollars to test promising ventures, hoping they can eventually hit it big.
So, how can you increase your chances of securing VC-backed company finance?
This blog will explore critical strategies to tip the scales in your favor. But before we delve into that, let’s understand why getting VC-backed investment is essential for your business.
The importance of VC-backed investment for firms
- International expansion: Helps them attract a global audience and enter new markets.
- Creation and R&D: Supports continuous innovation, experimentation, and development
- Fuel for scalability: Provides capital to expand rapidly.
- Authenticity and credibility: Validates a startup’s products and boosts its credibility in the industry.
- Overcoming risks: Provides security and guidance to mitigate risks.
5 tips to boost your chances of a VC-backed investment
Like a moth drawn to a flame, entrepreneurs are attracted to VC-backed investments to build their business empires and achieve significant returns. Yet, securing funds can be daunting, as investors are often meticulous in their choices.
Here are some ways to secure that coveted VC-backed investment:
1. Do your research
Doing thorough research is essential to increase your chances of obtaining a VC-backed investment. Learn about your potential investors’ preferences, parameters, and interests to help determine which is best for your company.
When researching, consider checking their investment history, portfolio, and background. This will help you identify the types of businesses they usually invest in and which deals are more appealing.
Furthermore, consider attending industry events and reading industry publications. You can get an opportunity to engage with new investors and win their trust for securing investment.
2. Create an intriguing narrative
Crafting a compelling story for presentation to investors is crucial. This helps them understand your vision and how you plan to achieve it. You must clearly outline your vision, covering essential aspects like your business model, competitive landscape, and market opportunity.
Showcasing your industry expertise is equally essential. This will demonstrate to the investors how your market knowledge will take your business forward despite encountering risks and challenges.
Another thing to remember is to create a unique value proposition. It would help to clearly articulate what makes your services or product unique from your competition. Outline your venture’s distinct qualities and potential for scalability and high returns. This will show venture capital financial advisory that your business is an optimal investment choice.
3. Build a stellar team
Before considering your business for investment, investors look comprehensively at you and your team’s ability to execute your firm’s vision.
A network of supportive team members is the key to unlocking financial happiness. You must assemble a team that complements your skills and brings diverse expertise. Ensure you define their roles and set goals based on their experience.
Remember, a resilient and cohesive team demonstrates to investors that your firm is confident and well-equipped to mitigate the challenges that arise with growth.
4. Showing proof of concept or traction
To check if your firm is viable for investing, VC investment analytics companies like to see your proof of concept or traction.
Some proof-of-concept examples:
- Rising sales figures
- Thriving partnerships
- Increasing user base
VC investors want to see your traction in the core market. Showing tangible proof that your enterprise is gaining momentum can bolster your appeal among investors. This will show them that your company goes beyond just having a product idea to gaining real-world acceptance and generating interest.
5. Present a clean cap table
A clean cap table (the list of owners or shareholders in a company) attracts investor interest. This is because they prefer businesses with a limited number of accredited investors.
A clean-cap table offers a clear and concise overview of shareholders, the amount they have injected into the firm, and their ownership percentages. This clarity is vital for gaining VC confidence.
Therefore, ensure you provide a transparent cap table, as messy ones can lead to conflicts and investor disagreements.
Entrepreneurs must distinguish their company from others to increase their chances of obtaining VC-backed investment. Apart from this, thoroughly research, craft a compelling narrative, present a clean cap table, have a supportive team, and show traction to investors.
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