How To Find And Secure Venture Capital Online
A VC (venture capitalist) is either an organization or person that invests cash flow into a business startup. In return for their investment the venture capitalist (or VC firm) will then either secure a position in the company as a controlling manager, receive shares of the business in the form of stock, or both. For many startups, locking down early investors is crucial, so we’ve put together this overview on finding and securing venture capital online.
If you own an existing or new business, or you have an idea for a company and you need financing, a VC might be able to give you the boost that you need to bring your idea to life. In order to help you find the right investor for your business, here’s a breakdown of just some of the ways you can get the process started:
Look For Venture Capital Associations
VC associations offer various resources & tools to small businesses and entrepreneurs to help them to locate the correct venture capitalist. There are numerous regional and national associations for those that need funding. The national VC associations include:
The Small Business Administration's (SBA) Small Business Investment Company (SBIC) Program
The SBA’s SBIC program helps small businesses to find & connect with the firms that may be willing or available to invest in their business. This is a program created by Congress to offer expanding & start-up small companies with venture capital. The SBIC's are regulated and licensed by the SBA.
The ACA (Angel Capital Association)
The ACA offers entrepreneurs and businesses with the information they need to prepare for funding processes and a list of professionals that include accountants and attorneys that work with the individuals or businesses that are looking for funding. It also includes a list of member VCs, with links to the websites of these firms. You can visit the Angel Capital Association online at http://www.angelcapitalassociation.org.
The NVCA - National Venture Capital Association
The NVCA, found at NVCA.org, is one of the trade associations that offer resources and services to entrepreneurs and VCs including various links to VC organizations, technology development, and software tools, along with industry information and data.
Gust (Formerly Known as Angelsoft)
Gust offers users a user-friendly searchable database to locate investors, allowing them to apply directly for Venture Capital from the Gust website.
Ask Around
Business brokers, successful entrepreneurs, and corporate attorneys are often great informational sources to find the right VC in your local area. Check with business associates, social networks, and colleagues around your area to give you contact information and the names of VC firms close to you.
Locating and Signing Up with Different Venture Capital Blogs
Many of the VCs use blogging to promote their businesses, a way to interact with entrepreneurs, and to socialize with other VC firms. A few of the more popular blogs you can use to locate venture capital and understand how they think include:
Find VC’s on Social Networks
Most venture capitalists use social networks to interact with different entrepreneurs and to promote their companies. Facebook, LinkedIn, and Twitter are the best places you can look for venture capitalists to find funding for your expansion or start-up.
Check the Top Online Databases and VC Lists
Most websites will allow you to search for VCs according to specific criteria. This typically includes location, industry, business state, and the funding amount that you need. Some of the popular databases and lists you can start with include:
Do Your Research
Finding the right VC involves a lot more than just locating contact numbers and names in directories. You should be looking for venture capitalists that compliment your business idea or company. This involves conducting research on the VC’s that you might be considering. To find information on the different VC’s, check on their LinkedIn, Facebook, and Twitter posts, visit their sites, and read up on the blogs that they post. A few things to find out about VCs that you are interested in include:
The stage of development that the firm will usually invest in a business…
If a VC only invests in businesses that are already established, you may be wasting your time trying to pitch an idea for your start-up. Narrow down your list of VC’s to contact by eliminating the ones that typically won't invest in companies that are still in the start-up stages.
The Management Style of a firm…
Many of the venture capitalists have an interest in becoming highly involved in the businesses that they invest in. You might want to cross off the ones that have requirements you find too rigid or the ones that do not align with the intentions you have for your business.
What type of businesses or/and start-up ideas these firms will usually invest in…
Many VC’s will limit their investments to a specific start-up idea or industry. Some only make significantly large investments and have a $1 million or even $5 million minimum investment threshold. For this reason, you may want to eliminate these firms from your list that don't invest in companies within your industry, or the ones with an investment amount minimum that exceeds what you need.
The Exit Strategy of the firm…
VC’s are investors (short-term) that will be interested in cashing out at a particular point. This translates into selling the company, making an IPO (Initial Public Offering), or merging your business with another. You should cross off the firms that have exit strategies that do not match up to the plans for your business.
Check References…
Not all VC’s are the same. You need to find a VC that can specifically help make your company successful. Check references and research 1) the successful deals that they’ve successfully put together, 2) whether they have worked with a company that is the same as yours, and 3) how successful they were with the latest deals they have made. The legitimate venture capitalists or VC firms will gladly show you their references. They will also regularly update their websites with information associated with their clients and their successful deals.