What if you have a startup for which you want to attract venture financing, but you do not know the venture capitalists?
The starting point for getting money from a venture capitalist is the realization that they work mainly through referrals - they hear about a promising startup or entrepreneur from someone they have worked with before.
The reason for this is simple: any individual venture capitalist can finance only a few companies a year, and for each its finances, they probably meet with 15 or 20, and there are hundreds more. Therefore they rely on networks so they can spend time on finding the right startup.
Thus, the main trick is getting into a position in which you are among those 15 or 20 that a particular venture capitalist meets based on recommendations from their network, and not among hundreds of people. Before you think about it, the first step is to create and develop your plan, your presentation, and supporting materials so that when you meet with the venture capitalist, you impress them right out of the gate, bringing a startup founded by someone who knows that he does.
We recommend that you read everything you need to do to create a truly effective business plan and presentation, and then pretend that you have already been refused once. Then, go through all the different things that you need to anticipate and fix before actually going through the door.
One of the reasons that venture capitalists meet with startups only through their networks is because too many of the hundreds of other startups that they can meet with look amateur and ignorant. Thus, you have an excellent opportunity to overcome the noise by creating an excellent first impression - you need to think things through and do all the hard work in advance to take your step and plan your masterpiece.
When working in the opposite direction, the best thing you can do is work product. Or, if you can't get a working product without attracting venture financing, then at least a beta version or a prototype of some form - a website that works, but has not yet been launched, or a mock-up of software with partial functionality, or something else similar. And, of course, it's even better if you stick to the existing "craving" of some form - clients, beta testers, some evidence of acceptance by Internet users, whatever suits your specific startup.
With a working product that can become the basis for a funded startup, you are much more likely to get financing as soon as you get in the door. In other words, if in doubt, work on the product. If you do not have a working product, and ideally clients or users, make sure that the presentation has been maximized, including layouts, screenshots, market analysis, customer research, such as interviews with real potential customers.
Do not worry about a detailed written business plan. Most venture capital funds either fund a startup based on a PowerPoint presentation of 20 slides or don't fund it at all. Consequence: any VC that needs an extended detailed written business plan is probably not the VC to work with.
Then do an extensive study of venture capitalists and find those who are focused on the sector related to your startup. Individual venture capitalists are usually quite focused on the companies they are looking for, and identifying these venture capitalists and selecting everyone else is critical. The best way to get in touch with venture capitalists is to work with the support of a venture startup, kick your ass, get a promotion, and work online all the way.
If you can't get a job with the support of a venture startup right now, work at a reputable large technology company that has a lot of people like Google or Apple, gain experience, and then go to work with the support of a venture startup. And if you cannot get a job at a well-known large technology company, get a bachelor's or master's degree at a large research university, from which respected large technology companies are regularly recruited, and then work at a reputable large technology company. Besides, read VC blogs - read them all, and read them very carefully. Blogging venture capitalists provide entrepreneurs a tremendous service both in transmitting handy information and in often putting themselves in touch with entrepreneurs in a variety of ways, including email, comments, and even downloaded podcasts. Each VC is different from how it wants to interact with people on the Internet, but be sure to read as many VC blogs as possible and interact with them as much as possible.
At the very least, you will begin to understand which venture capitalists who blog are interested in which companies. Sometimes VC bloggers can encourage their readers to communicate with them in a variety of ways. Further, some venture capitalists are actively introducing new forms of communication and interaction - current examples are Facebook and Twitter. Observingly, when a venture capitalist learns a new communication medium, such as Facebook or Twitter, they may be more interested in interacting with different people on this new medium than they wouldn't otherwise.
In general, this is a good idea for entrepreneurs who are looking for funding for a blog - about their launch, exciting things, their point of view. This puts the entrepreneur in a stream of conversation, which can lead to interaction with venture capitalists through the usual blogging environment. And when they decide to take a look at you and your company, they can read your blog to understand who you are and how you think. This is another excellent opportunity to make a fantastic first impression.
If none of these ideas work for you:
Your alternatives for financing are angel financing, initial loading with consultancy contracts or early clients, preserving your daily work, and work on a startup in your free time, as well as credit card debt.