How to make your startup ready for VC investment?
You have an amazing idea for a tech startup. You’ve put in the hard work, and now you’re ready to take it to the next level. But how do you attract venture capital?
VC firms are looking for a few key things when it comes to investing in a tech startup. If you can show that your company possesses these qualities, you’ll be well on your way to securing funding.
In this post, we’ll teach you how to prepare for attracting venture capital and make your business grow.
Get your MVP developed
MVP stands for minimum viable product. Such a product can cover the basic needs of your customers but is not a full-fledged solution with a complete set of features and opportunities. An MVP can be as simple as a landing page and a sign-up form, or it can be a more developed product with limited functionality.
The reason for building an MVP is to show investors your product concept and prove that you can execute your idea. When potential investors see that you have advanced further than creating a blurry vision of your product, they’ll gain more confidence in your capabilities and be more willing to invest in your startup.
Three world-known products launched like MVPs
The practice of starting a product with an MVP has long proven its efficiency. With an MVP, you can quickly assess user demand, product competitiveness, and the prospects for further development. The following inspirational examples show that a low-budget software product can certainly grow into a substantial revenue-generating solution.
Buffer is a successful social media scheduling service. Ten years ago, Joel Gascoigne launched it as a simple landing page where he described how the tool for managing social media accounts would work.
When visitors were clicking on the Plans and Pricing button, they saw a separate screen with three pricing plans:
- free (1 tweet per day, 5 tweets in scheduling)
- $5/month (10 tweets per day, 50 tweets in scheduling)
- $20/month ( unlimited number of tweets)
Gascoigne stopped doubting the relevance of his idea when he saw that visitors opted not only for free subscriptions but also for paid plans.
The world-famous marketplace for selling craft products began as a simple site with basic functions and a rudimentary design. Etsy entered the market when such giants as eBay and Amazon already had many thousands of users. Yet, despite tough competition, Etsy managed to quickly build a huge customer base and generate significant earnings within a short timeframe. The secret to Etsy’s success was its unique idea, ease of use, and affordable prices.
Before becoming the largest accommodation rental service, Airbnb was a simple local site with photos of a single apartment. After Brian Chesky and Joe Gebbia, the Airbnb creators, received three paying guests in a row, they were convinced of the validity of their idea. A few months later, they launched a full-fledged site version where hosts around the globe could post apartment listings, and guests could quickly rent their accommodation of choice.
Find the right investors
VCs can be a great source of capital for your startup, but you need to make sure you’re making an appropriate pitch for investment. Here are a few tips on how to find the right VCs for your company:
Do your research
Make sure you know which VCs are the best fit for your company. Each VC has different areas of expertise, so it’s crucial to find one that’s a good match for your business.
Modern tech startups attract funds from financial, independent, and strategic investors.
Financial investors are banks, financial institutions, or insurance firms that can invest large sums and pursue pure financial returns.
Independent investors are private equity firms investing their own capital and expecting to receive benefits at the product expansion stage.
Strategic investors include government and university programs, incubators, and business development funds that aim to support socially useful startups.
Each of these groups of investors can make seed investments or investments during the expansion phase. You can see the distribution of investment preferences in the table below.
You also need to take into account your field of activity when you are looking to attract VC funds and working on your pitch deck. The table below demonstrates the industry preferences of different VCs.
After you have collected VC funding insights, it’s time to get in touch with the right people and organizations. There are plenty of resources where you can meet investors for your software project. Make maximum use of them to reach the right people faster and achieve the desired result.
Follow VCs on Twitter. Many VCs post their thoughts on Twitter. Follow them to know what they are into. Comment on their posts or write direct messages to connect for mutually beneficial opportunities. Examples of well-known investor blogs are feld.com and avc.com owned by Brad Feld and Fred Wilson respectively.
Connect on LinkedIn. The larger the network of professional contacts on LinkedIn, the greater the opportunities for business development. Send requests to potential investors and invite them to connect for productive cooperation.
Attend industry events. This is a great opportunity to meet people interested in the area you are working in.
- Going to launch an AI startup? Attend the World Summit AI
- Thinking to digitize the healthcare industry? Join the Health Tech Event
- Working on new education opportunities? Register for the Edtech Summit
Send email. You can find VCs’ emails on their websites, LinkedIn profiles, or blogs. Come up with a teasing headline to grab attention. In a letter, briefly and meaningfully state your idea. Don’t use unnecessary details and stay strictly on topic throughout your fundraising deck.
Create and send a strong pitch deck
Your VC pitch deck is the most important document you will create as an entrepreneur. This is your opportunity to present your business to potential investors and convince them to write you a check.
Make sure your investor pitch presentation is well-prepared and well-structured. It should be clear and concise, and it should highlight the potential of your business.
To make sure your pitch deck is successful, follow these tips:
- start with a strong executive summary that captures the essence of your business
- include clear and concise slides that explain your business model, product, and team
- showcase your traction and milestones to prove your business is worth investing in
- make it clear why you need investors’ money and what the potential returns could be
- make sure your deck is visually appealing and easy to navigate
If you’re not sure where to start, take a look at the investor pitch deck template or contact us for help. With a little magic from our design team, you’ll be on your way to securing the funding you need to take your business to the next level.
Have a great story
You’ve probably heard the saying, “If you don’t have a story, you don’t have a business.” And it’s true. Investors want to see that you have a product or service that’s worth betting on and that you have a clear plan for making money.
But having a great story is only part of the equation. You also need to be able to tell that story in a way that engages and inspires your audience. Investors are looking for companies that are going to make a big impact, so you need to be able to show them how your product or service is going to change the world.
So if you want to attract venture capital, make sure you have a clear vision for your business, customers, and investors. After that, create and send an outstanding investor presentation deck to articulate your product story in a way that resonates with your audience.