I’ve spent a considerable amount of time creating an fully fleshed out business plan, but the start-up capital requirements ($5,000,000) are greater than I initially expected. What’s the best way to identify prospective venture capital firms (the business is internet/tenchology-based)? Once I’ve identified those I think would be a good match, how do I go about contacting them? What will I need to supply initially for them to evaluate whether to review my full business plan? Should I expect them to sign a non-disclosure agreement? Is there any other information I need? Thanks.
Rough and completely incomplete guide:
- Identify VC/Angel Investors
- Submit Executive Summary
- Wait/Follow up
VCs will never, in my understanding, sign an NDA with you. If you come through someone they know, there’s a much greater chance that they will entertain you.
Here are some links to get started:
http://www.garage.com/
http://www.mobiusvc.com/pages.php?pn=portfolio
http://www.amazon.com/Art-Start-Time-Tested-Battle-Hardened-Starting/dp/159184056
You pretty much have to get them via networking. VC firms recieve a thick stack of business plans everyday and pretty much run on the principle that if you don’t have the business skills to find a personal connection, there’s very little chance your idea is going to get off the ground.
Here’s an interesting site I came across today on /. :
Networking is the way to go, but you could look at other startups in your niche and who is funding them. Give them a call, briefly explain your idea and ask for a meeting.
Once you meet they will expect a PowerPoint presetation or similar, and some financial figures (including cash flow). If you are meeting with a VC company with several partners they will need to discuss it among themselves later and you will have to wait a week or two before you get an answer or follow up meeting. If you’re dealing with just one investor you could get an answer right there and then.
Whatever you do, do no send your business plan in the mail to many VCs and hope one of them will call you. One of them might even steal your idea.
However, I don’t think any VC firm will give 5 million to a nobody (pun intended)from the streets. You’re most likely looking at some seed money to get off the ground.
The venture capital market for what you describe committed suicide-murder back around 2000. It is still there but they are much more cautious now I don’t know what you are planning but a functional, small-scale proof of concept would always help.
There’s an excellent article in the May 2007 edition of Entrepreneur magazine regarding the use of Venture Capital databases to find investors for your company. BuzzLogic credits the Growthink Research database for helping it find investors for its $9.6 million Series A funding round which closed earlier this year.
http://www.entrepreneur.com/magazine/entrepreneur/2007/may/ 177098.html