7 Secrets Your Business Broker Forgot to Tell You (c) Paul Wetton

If you are an Australian business owner with expansion plans and need to raise some venture capital for your company, there are a few specific things you need to be aware of.

For a start, today’s switched on venture capital investor wants to make certain they are placing their hard-earned funds into a winning proposition.

So you need to stop and ask yourself; “How attractive is my business to a potential investor? And what can I do to make it as attractive as possible?”

Here Are 7 Things Every venture Capital Investor Wants to See in A Business

1. A Valid Business Plan: If you do not have a valid business plan a potential investor will just walk away. Having a good business plan is vital to getting the investment you need for your business. You should have a professional business plan completed that is easy to read with charts and figures. You can easily hire someone who specializes in writing business plans to help you put one together.  But you need to have a thorough and complete understanding of it and it needs to reflect reality.

2. A Marketing Strategy: No matter how great your idea is, no matter how awesome your products and services are, without marketing you’ll end up with no money. If no one knows your products and services are available, how are you going to get any sales? You need to create a marketing plan and strategy to get to your target market to make the most out of your marketing efforts. Getting to your target market can help you create sales and keep them coming.

3. A Succession Plan: What will happen if you lose a key business partner? Before they’ll invest a cent in your dreams astute venture capital investors will want to see a contingency plan in place to cope with the death or departure of key team players, managers or partners. Put together a succession plan to show investors that you know what to do if any of these situations poses themselves on you and your business.

4. An Accountant, Financial Controller and Bookkeeper: It is absolutely vital that you have the right financial systems in place before you have a right to ask anyone to invest in your business. They will want to see the numbers. They will want to see your systems. The numbers and the systems can help investors see patterns in your cash flow and know exactly what they are getting into.

5. Internet Marketing Strategy: Only a fool would ignore the staggering implications the Internet has on a business. If you are just ‘hoping the net will go away’ you need to wake up and take action now before it’s too late. The Internet is your gateway to the entire world. Why keep your business in just one area when you can market your products and services to the world?

6. Systems: Investors look for business owners that understand the fact that they need systems to run their business and people to run their systems. Your business plan should clearly demonstrate that you understand this.

7. Accountability: Investors want to know that you will be held accountable to someone for reaching sales targets and key objectives. One good idea is to hire a business coach that will use graphical weekly and monthly reports to measure and track every aspect of your business.

Bonus 8. The Exit Plan: Investors are keen to know how they are going to see the return on their original money as well as how they are going to see it multiply.  Options for this are an IPO (less than 5% of VC funded companies achieve a successful IPO) or a Trade Sale (selling to a larger company).  The key to making your business attractive to a larger company is found in the post Planning for Your Ultimate Exit.

These eight things are by no means exhaustive but trust me, without them you’ll have little to no chance of attracting the venture capital investment you seek. Simply follow the above seven steps to success in getting interest from an investor

Minimizing The Risk In Venture Capital © Paul Wetton

According to the online  encyclopedia, wikipedia Venture Capital Investments Are Usually ‘High Risk’

But is this really the case?

Obviously there are risks involved in any business but IF you as an investor do your due diligence you should be able to minimise the risks considerably.

The key is to look at a potential investment opportunity from a completely non-emotional perspective.

• Go over the businesses strategy with a fine tooth comb.
• Ask to see their marketing plan.
• Ask for market research to indicate the market demand and  viability of the opportunity.

Blanket statements like:  “Venture capital investments are usually high risk” are about as accurate as saying “All Irish people love playing marbles”

Raising Second Round of Capital © Paul Wetton

You should begin raising your second round of financing before you need it.  Desperation will not help your cause.

You should raise more money than you actually need to help meet any unexpected expenses in the future.

It helps to connect the fundraising with an anniversary milestone or other special event.  It gives the investors a sense of accomplishment.

Research to find the best investors.  Find out if deals similar to yours are being put together and study the numbers and find out what management teams are being put in place.

Venture capital is the obvious option for second round financing.  Venture capitalists bring experience and partnership to the table along with the money.  If all you need is money then mezzanine funds are an option.

Keys to securing second round financing:

1. Strong team.
2. Hot market and growth potential.
3. Quality customers.
4. Technological edge over other companies.
5. Image.  Do others perceive you as a hot company?

Keys to Effective Goal Setting