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Ten Ways to Increase Your Chances of Raising Venture Capital

Published: 12/17/2006 11:45:21 AM
(Previous post - #2 in a series)

# 3: Be realistic with how long it takes to raise money.

If you don’t have a personal introduction to a Venture Capital firm or angel group, then understand you won’t get a lot of phone calls immediately. Don’t leave funding to the last minute.

I’ve heard more than one complaint from entrepreneurs about how long it takes to get through the funding process. One of the reasons for this is that it typically is a consensus-based process and this takes time. Usually, the larger the number of individuals involved, the longer it takes. Investors in risky ventures like to take time evaluating the company, the management and the market space. They prefer to contact a variety of experts or other people whose opinion they value. They will keep re-visiting the opportunity until it feels right to them to write a check.

In my experience, entrepreneurs need to budget 4 - 6 months from beginning of the funding search process to receiving money in the bank account. If any of that time period falls during August or the end of year holiday season, add another 1 to 2 months to your time estimate, since investors take vacations or are otherwise unable to contact their network during that time.

It also helps to have a backup plan in case funding does not materialize. Investors can smell desperation and they generally don’t like the smell, so be prepared to patiently wait until the timing is right. Keeping investors who have said “No for now” informed of your company’s progress is a great way to keep the ‘pilot light’ on and shows your determination and understanding of the process.

Don Jones

VentureDeal

 

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Don Jones
CEO, VentureDeal

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