Peter K. Adams

Navigating the world of venture capital as you seek to raise funds for your business can be scary and confusing because of the high stakes. After you identify whether venture capital is a good choice of funding for your company, you can begin to seek out investors. When seeking venture capital, you need to know who the venture investors are and where to find them.

It’s very important to figure out the type of company you’re building — a venture company or a lifestyle business — so that you can decide whether you should consider venture capital in your business growth strategies. Sometimes, determining which category you fall into is hard. Even though lifestyle businesses can make annual revenues into the millions, other things, like the type of business and/or the rate of growth, make them unsuitable for venture capital investment.

Venture capital funds are entities that exist to manage large amounts of money, put that money in growing companies, and then monitor the companies to protect the investment until what is hopefully a lucrative exit, when the company is at its peak value. A VC firm is a business in itself that manages a fund which is also an entity within itself.

There are a few times when your attorney more than pays for himself, and negotiating your venture capital deal is one of them. The value in having an experienced attorney goes beyond his knowing the law and includes his having enough recent experience to know what the generally expected negotiation norms are and, even better, to know how the parties have behaved in negotiations in past deals.

As you prepare your company for investment, be aware that venture capitalists scrutinize all aspects of your company. You do not have to be strong in all ten aspects in order to be ready for investment, but you should strive to develop each point as your company develops. Pay particular attention to these ten areas: People: The most important element of your company is the team.

Husband/wife, father/daughter, or other family member teams can be particularly challenging for venture capitalists. How likely is it that the best choice for a CFO (Chief Financial Officer) and CMO (Chief Marketing Officer) happened to fall in love and get married? It’s more likely that one half of the couple is a weak link.

When you are pitching your company to venture capitalists, how you dress can make or break your chances. The accepted style is different in different areas of the country — sometimes from city to city — and it may be specific to the type of company you’re representing, as well as the industry. Boulder, Colorado, for example, has a culture built around young software start-ups.

When you pitch your deal to a room full of investors, you must ensure that everyone can easily hear you. For that reason, microphones are critically important in large or noisy rooms. To work well, these highly specialized pieces of equipment need to be used properly. When pitching to investors, the handheld mike is most common, but you may come across a lavalier or a podium mike.

Some companies move quickly through the process of raising capital for their business ventures, and some take a long time to close the deal. The speedy fundraisers tend to be proactive about meeting investors, and when they find the right investor, they are swift about getting them involved. Know what you want: The most powerful thing that you can do to make your investor pitch clearer and to help your negotiations go more smoothly is to know what you and your team want for your company.