Three Things Your Startup Needs to Attract Venture Capitalists

Many entrepreneurs, who don’t fancy the idea of relying on bank loans or personal assets for their startup venture, make the decision to pitch in front of venture capitalist in order to secure funding for their companies. As one of the most exciting moments for entrepreneurs is the moment when they pitch in front of the investors, there are so many things to take under consideration before this very important meetings start to take significant part in the entrepreneur’s schedules.

Venture capitalists rick a lot by investing in startups and they often tend to demand major role in the company in order to keep the work process and company’s growth under their personal supervision. This can be frustrating for many entrepreneurs, especially for the high-spirited and independent people. Basically, choosing to work with a venture capitalist is risky for both sides, but it often works out for the best.

In order to give justification for the high risk that they take, many venture capitalists have high expectations from the entrepreneurs and look for specific personal traits and skill sets, but for many important capacities of the startups as well.

There are five most common stages of venture capital financing: The Seed Stage; The Early Stage: The Startup Stage; The Second Stage; The Third Stage and The Pre-public Stage, and all of them carry their own risks. Remember, the stage of your company is most likely to determine the decisions of the venture capitalists.

High-potential and credibility

Venture capitalists tend to invest in young companies that have the potential to grow and eventually to generate the rate of return for the investors, most commonly by becoming public. When entrepreneurs pitch in front of venture capitalists, they need to present their startups as promising companies that have the potential to become successful and lucrative. Again, prepare for your pitch depending on the stage of your company. The Startup Stage carries a lot of risks for the investors. It is less risky compared with The Seed Stage, but here the investors want to see clear business plan, market research and strong growth strategy, which are not that essential when pitching for seed investment.

Uniqueness and authenticity

Investors appreciate ideas and approaches that are innovative and have their own authenticity, and trust more at startups that provide unique services, products, customer support and so on. Everything that will attract more customers and will make the company recognizable is well-appreciated from the venture capitalists. But there is one interesting touch that can secure funding for your company: not only the services and the products must be authentic, every other aspect of your company can be unique: from the marketing strategies through the company culture to the leadership approaches and team management. Investors appreciate uniqueness because it helps building recognizable brands that keep the number of new and returning customers growing.

Value

Value is what matters for the customers. Even the best sounding idea cannot become profitable business if it doesn’t satisfy the needs of the customers, if it doesn’t solve problems or doesn’t bring value for the buyers. Investors look for valuable and scalable businesses that satisfy the demands of the customers and provide something better which outruns the competitors. Remember that value differs from worth and build your brand according to this important approach: importance vs. cost.