Online business owners turn to venture funding to secure and help their business grow without being indebted to any other party. It allows them to raise funds even before they start operating and generating revenue from online business.
New online business startups often need venture funding for a variety of reasons. These reasons can be anything such as:
- They might not be able to take loans from banks at the initial stage
- They might have fallen short on investment
- Or, they simply don’t have enough funds for a future endeavor
There are many high-growth opportunities associated with venture funding. Let’s take a look at the following tips for how to find venture funding.
A Target List
Venture capitalists often have particular companies they like to fund that operate in a certain area. These categories can be software, artificial intelligence, consumer products, or technology.
You need to list some venture capital firms (also known as VC firms) that would be a good fit for your business. If you fall within their focus, you may be able to target a proposal at them.
Look for firms that fall within your market and have a good reputation for funding in the industry. That way, you can easily find a firm interested in funding a product or service you offer. Once you've found VC firms aligned with your market, tailor your proposal to highlight metrics like recurring revenue and customer retention rates, appealing to SaaS funding specialists.
It is recommended that you prepare a list and update it as you go to ensure you don't double up or miss a follow up call etc. Keep the stage of your business in mind as well. Venture funding companies have different stages that they provide capital for to invest.
Past Deals Are a Deal Breaker
The best way to check out a VC firm is to simply visit their website to take a look at the past deals they have offered. It is a great way to understand where you stand with the firm and looking for the kind of investment they are willing to offer.
Try to locate an organization or a small business similar to yours, considering products or services or merely size. The VC site should be transparent and will contain the names of businesses they have funded in the past.
The Location Truly Matters
Many VC firms only invest locally, while some also consider working outside their state boundaries. For example, if you are based in Chicago and are interested in a VC located in Washington, DC, make sure the VC funds in different states.
Bear in mind that some cities also get more VC firms, such as New York. So you could locate yourself in a city that brings you long-term offers in terms of funds rather than pinning you down to the ground.
Your reputation will also play a role in attracting VC firms if you have some sort of experience in the field; there is no better time to flaunt it.
Get Ready with Your Business Plan
When it’s time to present your business plan to an interested VC firm, make sure the plan is for three to four weeks because, at some point, you will deviate from it. However, the deviation shouldn’t seem like ambiguity or an uninformed decision in the long term. If you need help with your business plan, you can try LivePlan. LivePlan is a cloud-based application that can help striving online business owners create a comprehensive business plan.
One thing to remember is that VC firms will reject you without reading a business plan, but they would never invest in your firm unless they read your business plan. So it is a part of their due diligence if they are interested in your online business.
Try to follow the correct format and an organized template because there are well-known entrepreneurs in the market seeking funds too. And the reality is that if you don’t have a big name, these people will be chosen over you. So put your best foot forward.
The Perfect Pitch
Once you have emailed the VC firm or are thinking of emailing them, a good video or one-page pitch can improve your chances of obtaining investment.
Instead of investing your time in an email summary, go for a video pitch. Today, videos receive a much better response than any written piece of work.
Once they view your video, they should give you a heads-up for your final pitch. Getting an invitation to pitch is your chance to have a direct conversation with the firm and meet them. They are ready to hear you out and assess the credibility of your plans.
A pitch isn’t the only factor they consider, so even if you feel you didn’t do well, you should still have hope. But put your best foot forward if you genuinely want that investment to find its way to you.
Give it time
Everything takes time. Matters regarding investment are sensitive and require a lot of scrutiny. VC funding programs often take between six to twelve months to offer something to startups.
During this time, they might seek several other documents like financial statements. Next, they’ll go over all the legalities to decide if they want to work with your company. Finally, they’ll decide on whether your product has enough potential and is worth investing in.
You can apply for different VC firms; however, it doesn’t mean that there’s no hope if they take time. You can always reach out for a response to your earlier email.
Keep doing your bit and have every legal and accounts document ready at your end. This will save time and speed up the part of the process that is under your control.
FAQ
How Should a Business Approach an Email to a VC?
Write personalized emails to each VC you are targeting. Include all critical information regarding your online business and product. Provide reasons for contacting them and tell them about your current progress with your online business.
What is a Pitch Deck?
A pitch deck is often a 10-20 slide slideshow or an executive summary containing visuals and details about your online business. It is the focal point of a pitch meeting.
Which Documents are the Most Important to a VC firm?
The most important documents that VC firms require are accounting or financial documents of your firm to access the current position of your business and see whether investing in it is safe or not.
Recommendations for Venture Capital Funding
Gust allows you to have a smarter approach to a startup and helps you grow by funding your business.
The platform works efficiently to offer learning opportunities to newcomers as it provides personalized feedback to help them overcome their weaknesses.
This is a venture funding platform that helps you contact the VF investors, much like UpWork allows you to search for freelancers.
It is a free-of-cost platform that guides people to find good remote startup jobs and investments.
More of a traditional lender but not a bank. Faster approvals and tailored loans are some of the features OnDeck offer. The service is highly transparent in terms of the funds they offer and funding options.
Go Kapital is a financial technology firm that makes lending easier and provides several financing alternatives to businesses. they leverage technology to simplify and expedite the search for commercial funding, and make the application process fast and simple.
The firm funds businesses in all fifty states rather than sticking to local funding schemes. As a result, it makes it easier for online businesses to reach out and try their luck no matter their location.
Conclusion
Connecting your online business to a funding VC is a critical step that will take an innovative and efficient approach. Knowing how to find venture funding can be hard but you can only plan a strategy once you have all the information. Make sure you conduct proper research before you apply.
It might feel like a lot of work to follow these tips, but it’s not because once you get that investment to kick-start your online business venture and see your products ready for delivery, you will realize that hard work pays off well and is always worth the effort. We hope this guide has provided you with some insight into how to find venture funding for your business.
