5 Essential Tips to Know About Early Stage VC Funds

Published by Emma

Venture Capital (VC) funding is one of the most common types of financing that people who want to start their business turn to for their financing options. VC refers to the funds flowing into a company in the form of an investment instead of a loan. Venture capitalists control the funds, and they would only grant your request if you prove to them that the startup would have a high return rate. Giving early stage VC funds to business or company owners may also be granted to those who already used up their initial funds and want to develop their business into something more. If you are interested in VC funds, you should read more of the basics below.


Be Sure That Your Company Is Fit for VC Funds

Not all startups will be fit for VC funds. You have to understand that venture capitalists are usually individuals with high net worth, such as former entrepreneurs who are always looking for companies that need investment. What they want is something that promises a significant return. VC is a risky business, but these investors are after equity over your company. This means that they would own part of your company, so if you are not ready to give away a part of your business, early stage VC funds are not for you.

If your company cannot grow big quickly, VC funding is not the best option out there.

If you think your business is fit for VC funding, you should read more of the tips in the following paragraphs.

  • Make That Pitch 

There are a lot of shows that document VC funding. You might have seen people giving their sales pitch and getting the financing they need while giving away a portion of their company. Although those are only shows, that does happen in real life.

To get the early stage VC funds you need, you have to show the venture capitalists that your product or business will sell. It must be so promising that they would not second guess the possibility. For example, you should show that your product or service gets used by many customers. Present your data and use the numbers instead of just feedback.

It would be best to convince venture capitalists that the market you are targeting generates thousands of dollars in revenue. Please do your research because knowing the industry, your product or service, and the target customers is impressive, and it already builds the trust between you and your venture capitalist.

  • Be Prepared for Competitors

More and more people are venturing into startup businesses, and the chances of you thinking of a company or a product is an original is pretty slim. That is why you have to be ready for your competitors. You have to study the industry and think of something that you can only offer.

The trend now is that venture capitalists usually invest their money in later-stage deals. However, you have to make your product or service so good that they would grant your early stage VC funds.

  • Get Professional Assistance 

You can always learn about early stage VC funds on your own, but it is still best to talk to an expert. Hire a lawyer or someone versed in the investment process. In hiring an expert, you should look at how long they have been handling early-stage startups because if you go for someone who is a newbie like you, it could be disastrous. Of course, you have to prepare the money you will be paying for the assistance. You are paying the expert to help you avoid pitfalls and negotiate with venture capitalists the best way it can benefit you.

  • Use That Funding Wisely 

If you receive the early stage VC funds, you should know how to spend it wisely. Experts say that you should use the initial capital to hit your next milestone. You have to use the money to make more money and use it for your product or service’s basic needs, such as patent filing.

Wherever you use the VC fund, you should make sure that it will bring your company to a higher valuation.

One of the basic things you should also know is those venture capitalists will not just give you the money then disappear. They would be there by your side, helping you and your company to grow. They are in it because they want to see their money growing, too. They will most likely attend your business meetings and help you make decisions for your company. They will give you inputs on how to run your company, and it is up to you to follow their tips and advice. After all, it is their money you are working with.

Leave a Reply

Your email address will not be published. Required fields are marked *