Before Approaching the VC, Know This

Talk to

• Your lawyer or accountant about seeking VC funding, chances are they can refer you to someone in their network that can help you, there’s no need to re-invent the wheel…
• Someone you know who received VC funding and gain from their insight, preferably in your same sector.

Be prepared to

• Submit very sensitive information such as your credit history as well as some proprietary info
• Be grilled by the VC if you’re invited to the interview
• Lose some control over your company as VCs bring in market best practices that you were not aware of, or bring in someone better to do the job than your pal Joe.

Be informed

• Know the legal documents you will be signing as part of the VC process such as the Term Sheet and Non-Disclosure Agreements (NDA) among others. Your friendly neighborhood VC attorneys put together templates of model legal documents at National Venture Capital Association .
• Subscribe to internet websites such as www.privateequityinfo.com, www.venturedeal.com, www.capitalvector.com, www.PEHub.com or www.privateplacementletter.com
• Learn more about the VC industry by subscribing to journals such as Reuter’s own Venture Capital Journal (see www.VCJnews.com) and Private Equity Week (see www.PEWnews.com) or Buyouts News (see www.buyoutsnews.com)
• Check out VC “tweeters” at www.venturemaven.com, which maybe relevant

Research your potential suitors

• Research suitors at Venture Capital associations such as National Venture Capital Association at www.NVCA.org and the New England Venture Capital Association at www.NewEnglandVC.org ($300 annual dues)

Miscellaneous stuff

• The majority of investments are going to Biotechnology, Medical Devices and Software with the majority going to Silicon Valley followed by New England
• Recent IPOs were mostly of companies that were incubated in 2000 – 2003, a challenging cycle
• The hottest trends are in Cleantech/Energy and the Internet
• Your VC should bring more than money, they can add value in more ways than one.

A final thought, you’ll thank me for this:

Try to combine the famous 10-second elevator sales pitch with your business card and include the following on the back of your card:
• What? What novel idea you hope to offer – the supply side of your pitch
• Why? Why is there a need for your idea – the demand side of your pitch
• How? Is it proprietary – is it feasible
• Who? The people that make it happen
• When? Is it ready for production or still on the drawing board
• Use bullet points and don’t forget to KISS it (Keep it simple smarty)
o This way busy VCs might recall you when the time is ready

Happy Funding!

EZ the VC

Disclaimer: Please note that the info provided is for the sole purpose of educating the reader and does not entail an endorsement in the above mentioned organizations or websites.