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Introduction
to venture capitalists through referral sources
Introduction
to venture capitalists through referral sources they respect improve the
odds of securing financing. As venture capitalists themselves say: "You
need to have trusted referral or otherwise you just waste your
time".
Though
services of reputed consultancy companies may be too expensive for
first-time entrepreneurs at the early stage, some special mutually
beneficial arrangements with could be explored. For instance some business
incubators and entrepreneurship development institutions have an
arrangement with business consultancies according to which the latter
charges the start-up entrepreneur only a fraction of their fee at the
initial stage provided the enterprise ties up with them for its all future
consultancy needs up to a certain milestone, e.g. initial public offering.
Another
option would be exchanging consultancy service fees for an equity stake in
the company. This option would also be beneficial for the company
management, as in order to maximize their profits the consultancy would
provide continuous business coaching service to the company they are
invested in.
Cold
calling on venture capitalists
"In
a highly competitive field with many players, you need to be able to
articulate your competitive advantage in a matter of minutes, if not
seconds. If you cannot, you will lose your prospective customer's
attention, and the business" (MoneyHunt, Spenser & Ennico)
Get
prepared - you may have less than one minute for introduction of
your project to the prospective investors at the very first meeting.
The investors are very busy people who are usually short on time. Take it as a challenge and impress your future financial partners
by your professional approach. The introduction will either make or break
your opportunity with them. Don't try to explain your technology
idea during this minute or ask them to read your 300 page long feasibility
report (even if you have it). Your business plan and executive summary are
often not of the first importance at this very first stage either.
Investors are yet to be persuaded to invest their time to read them. To raise their interest, make your project introduction in their
language. For this, you need:
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