what are the steps to get venture
capital it’s a question that came in
from a YouTube viewer I are born or
anger 89 or airborne or anger 89 having
the hard name anyway wrote in I want to
get venture capital how does it work
what I mean to ask is what are the steps
from finding one to closing the deal so
I used to be in the VC business here it
is this is how you do it this is the
process that you have to go through and
hopefully you get some advice here that
can help you actually go and land the
deal okay
most businesses never make it they’ll
get rejected by VCS mostly without even
a response so here’s the process it
usually starts with connecting with a VC
okay now BCS typically have targeted
funds okay they look at specific
industries and they create a fund around
it so when you are researching your VCS
you can go online you can find out all
the different venture capitals out there
you can see who’s recently raised to
find do they have money if they don’t
have any open money then you can make a
connection but they’re not going to
invest in you so focus on the ones that
have money next see if they have an
interest in your industry VCS want to
see rapid growth they want to see at
least 30% a year return on their
investment not in the first year but
compounded for when they exit and they
want to be able to get out of your
business in five years so that’s being
acquired that’s going IPO that’s
management buyout whatever it is so you
have to have a business that can throw
out those kinds of returns so it’s
typically something like software or
technology
if you can’t ramp up fast enough and
something you don’t have a great
business it’s just not a great business
for venture capitalist so this is also
part of a research phase I haven’t even
gone and contacted them yet the last
thing I would do is look at do they have
any portfolio companies already who you
can help so have they already invested
money into a business into a different
startup that you can give some advice
and Momentum’s and guidance some help
with somehow if the portfolio companies
can work together then you’re not just
bringing an investment opportunity to
them you’re bringing a new partnership
that can already help someone they’ve
already put money into so you’re
bringing more to the table okay once you
found these different VCS the next tip
is to reach out and contact them and
that’s pretty easy they all have an
email or phone number that you can dial
into you can send them a message you can
find out who the VC is you can see who’s
accepting the business plans and send it
off to them the most important thing the
VC is going to look at and this was me I
was on I was on the screening side of
things I was seeing all the deals that
were coming in and you had to get
through me before you got to talk to the
people who are going to raise the money
you have to have an executive summary
that makes sense
think about two pages it defines
everything in your business plan that
has to make sense it has to be written
in plain English what we had an industry
term we use was the grandmother test it
has to pass a grandmother test your
executive summary has to be something
that you could show your grandmother or
somebody who knows nothing about your
business and they could read it and
understand it so as to be in plain
English has to not be filled with jargon
and it has to just make plain common
sense and a lot of companies when they
write their executive summary even their
whole business plan it’s so technical so
filled with jargon that when they read
it it makes sense because that’s the
world you live in but remember VCS
they’re generalists they’re not
specialists on a specific product like
you are so you have to make it make
sense for them if they can understand it
they’re gone so show other people your
executive summary and your business plan
make sure it makes sense that’s the
first thing I look at okay if your
executive summary is not a winner it’s
gone
delete trash can it’s gone maybe not
even response if they like it they’re
going to dig deeper the next thing going
to look at is your team
the agency has this guide done it before
is there any startup experience at all
here the term when the VC world is is
this the horse for the course and so you
want to build as much momentum as you
can here if you’ve never had an
experience building a startup try to get
people on your board try to create a
Board of Advisors not a Board of
Directors which has more legal
implications but an advisory team get
people who can lend their name to the
project even if
not actively involved in the business
show that you’re not just a one-man show
or a couple man show get people who’ve
had some experience on your advisory
board and the Weiser board is a loose
term it’s just really getting somebody
who will lend their name to the project
and say hey I believe in these guys and
I’m going to help them out the next
thing I look at is your financials first
do you have any revenue if you have
revenue you’re already separated from
ninety nine percent of the people who
apply most people just come with an idea
if you can have something that has some
revenue you’re way ahead of everybody
else and they’re not expecting you to be
huge that’s why you’re coming to them
that’s why you need money the easiest
money to raise though is expansion
capital you figured out how something
works and there’s a demand for it and
now you’re ready to blow it up and you
need money to help do it so get some
revenue get some momentum as much as you
can I know it’s hard at the start and
it’s not going to be glamorous to say
hey I have $10,000 in sales but that’s
10,000 more than most people so you’re
already ahead of the game and the more
money you have coming in the better it
is they’re not expecting you to have it
all figured out but shows some momentum
and then they’re gonna look at your
projections can you throw off enough of
a return that they can make money do you
have enough growth potential in your
business if if it’s a great you know
profitable company idea but it’s not
going to grow at least 30% a year return
for the investor then they’re not going
to be interested and then they’re going
to look at the rest of the plan so it
starts with the executive summary then
the management team then the financials
and then the rest of the plan very
detailed hopefully this is helping you
the next thing is if they like you
they’re going to call you in for a
meeting you’re going to come in for a
meeting they’re going to just scope you
out you know you’ve written a great
thing on paper and now they want to see
who the person is who’s presenting this
idea and they’re going to challenge you
on your business plan and they’re going
to challenge you on your financials and
you better have an answer for everything
every number in your financial statement
you have to have a reason for and I know
a lot of it you’re you’re picking out of
the air but you have to be able to back
it up where you’re spending the money
to be clearly defined how much do you
need and where is it going – and why do
you need to spend this much money on
this initiative you have to have solid
answers to that
if you waver you’re not going to get the
money they’re not going to think you
have the confidence to build this thing
up so practice drill it be able to
explain every single number every line
in your executive summary in your
business plan you have an answer for
practice practice practice and that will
help you win the pitch if they like you
so that first meeting goes well the next
thing we’re going to talk about is
evaluation now that should already
either be in your business plan or you
have a clearer sense of what it’s going
to be because if they don’t like your
valuation then they’re not going to find
you before the waste any more time they
have to know how much it is that you
want and how much of the company they’re
going to get for I know what your bottom
line number is you know what you are
willing to accept and what you are not
willing to accept what you’re going to
walk away from if you can agree on that
all of that they like evaluation they
like your plan they like your meeting
you all of that’s going really well the
next thing you’re going to do is do
diligence and this is usually a couple
weeks building it they’re going to dive
deeper into your business they’re going
to learn more about your industry learn
about your competition they will ask for
more records and information for your
company if you have an office they’re
going to want to see it you have a team
they’re going to meet them they’re going
to dive as deep as they can to get to
know your business if all that goes well
then they’re going to think about what
are the holes that you need to make this
thing really take off so for example you
might not be the best CEO for this
business you know if you have some
software company maybe your best place
is going to be leading the tech team but
not actually growing it as the CEO that
might be the advice that comes back and
that might be a deal breaker are you
willing to step out of your role as CEO
for somebody who’s actually built up a
software company before and take it to
the next level they’re going to come up
with a list of suggestions to help you
grow your business this is how they see
it growing they’re going to give you X
amount of dollars and you’d like to see
these changes made some will be now and
some of
in the future but this is their
direction you have to be on the same
same page
you have to believe in that same vision
with them if everything is good if you
agree they’re going to give you a term
sheet they’re going to say this is how
much money we’re going to invest this is
evaluation and you’re going to have a
limited amount of time very short to
make a decision yes or no because what
they don’t want to happen is you shot
the deal so you get a term sheet from
one VC and then go to another one and
say hey this VC gave me this deal so you
can you do better so you have a really
small window to make a decision and then
from there you say yes the one that you
like and you go forward so that’s kind
of a twosie of how to raise money from a
venture capitalist
the biggest challenge typically is right
up front because 99% of business plans
don’t get pulled in for that first
meeting so really do a good job with
your executive summary with your
business plan
the management BIOS the team you’ve
built and the the financials and
hopefully some revenue momentum and now
give you your best chance of getting
that first meeting and then it’s up to
you to seal the deal if you have any
more questions about it leave it in
below leave in the comments and happy to
walk you through it that’s kind of a
high-level overview of the whole process
in a couple minutes for those are you
watching like the video thumbs up below
I’ll do more for you and I want to hear
we have to think leave a comment
underneath let me know you have a
question leave it below make a video
response for you guys thank you so much
and I’ll see you soon
capital it’s a question that came in
from a YouTube viewer I are born or
anger 89 or airborne or anger 89 having
the hard name anyway wrote in I want to
get venture capital how does it work
what I mean to ask is what are the steps
from finding one to closing the deal so
I used to be in the VC business here it
is this is how you do it this is the
process that you have to go through and
hopefully you get some advice here that
can help you actually go and land the
deal okay
most businesses never make it they’ll
get rejected by VCS mostly without even
a response so here’s the process it
usually starts with connecting with a VC
okay now BCS typically have targeted
funds okay they look at specific
industries and they create a fund around
it so when you are researching your VCS
you can go online you can find out all
the different venture capitals out there
you can see who’s recently raised to
find do they have money if they don’t
have any open money then you can make a
connection but they’re not going to
invest in you so focus on the ones that
have money next see if they have an
interest in your industry VCS want to
see rapid growth they want to see at
least 30% a year return on their
investment not in the first year but
compounded for when they exit and they
want to be able to get out of your
business in five years so that’s being
acquired that’s going IPO that’s
management buyout whatever it is so you
have to have a business that can throw
out those kinds of returns so it’s
typically something like software or
technology
if you can’t ramp up fast enough and
something you don’t have a great
business it’s just not a great business
for venture capitalist so this is also
part of a research phase I haven’t even
gone and contacted them yet the last
thing I would do is look at do they have
any portfolio companies already who you
can help so have they already invested
money into a business into a different
startup that you can give some advice
and Momentum’s and guidance some help
with somehow if the portfolio companies
can work together then you’re not just
bringing an investment opportunity to
them you’re bringing a new partnership
that can already help someone they’ve
already put money into so you’re
bringing more to the table okay once you
found these different VCS the next tip
is to reach out and contact them and
that’s pretty easy they all have an
email or phone number that you can dial
into you can send them a message you can
find out who the VC is you can see who’s
accepting the business plans and send it
off to them the most important thing the
VC is going to look at and this was me I
was on I was on the screening side of
things I was seeing all the deals that
were coming in and you had to get
through me before you got to talk to the
people who are going to raise the money
you have to have an executive summary
that makes sense
think about two pages it defines
everything in your business plan that
has to make sense it has to be written
in plain English what we had an industry
term we use was the grandmother test it
has to pass a grandmother test your
executive summary has to be something
that you could show your grandmother or
somebody who knows nothing about your
business and they could read it and
understand it so as to be in plain
English has to not be filled with jargon
and it has to just make plain common
sense and a lot of companies when they
write their executive summary even their
whole business plan it’s so technical so
filled with jargon that when they read
it it makes sense because that’s the
world you live in but remember VCS
they’re generalists they’re not
specialists on a specific product like
you are so you have to make it make
sense for them if they can understand it
they’re gone so show other people your
executive summary and your business plan
make sure it makes sense that’s the
first thing I look at okay if your
executive summary is not a winner it’s
gone
delete trash can it’s gone maybe not
even response if they like it they’re
going to dig deeper the next thing going
to look at is your team
the agency has this guide done it before
is there any startup experience at all
here the term when the VC world is is
this the horse for the course and so you
want to build as much momentum as you
can here if you’ve never had an
experience building a startup try to get
people on your board try to create a
Board of Advisors not a Board of
Directors which has more legal
implications but an advisory team get
people who can lend their name to the
project even if
not actively involved in the business
show that you’re not just a one-man show
or a couple man show get people who’ve
had some experience on your advisory
board and the Weiser board is a loose
term it’s just really getting somebody
who will lend their name to the project
and say hey I believe in these guys and
I’m going to help them out the next
thing I look at is your financials first
do you have any revenue if you have
revenue you’re already separated from
ninety nine percent of the people who
apply most people just come with an idea
if you can have something that has some
revenue you’re way ahead of everybody
else and they’re not expecting you to be
huge that’s why you’re coming to them
that’s why you need money the easiest
money to raise though is expansion
capital you figured out how something
works and there’s a demand for it and
now you’re ready to blow it up and you
need money to help do it so get some
revenue get some momentum as much as you
can I know it’s hard at the start and
it’s not going to be glamorous to say
hey I have $10,000 in sales but that’s
10,000 more than most people so you’re
already ahead of the game and the more
money you have coming in the better it
is they’re not expecting you to have it
all figured out but shows some momentum
and then they’re gonna look at your
projections can you throw off enough of
a return that they can make money do you
have enough growth potential in your
business if if it’s a great you know
profitable company idea but it’s not
going to grow at least 30% a year return
for the investor then they’re not going
to be interested and then they’re going
to look at the rest of the plan so it
starts with the executive summary then
the management team then the financials
and then the rest of the plan very
detailed hopefully this is helping you
the next thing is if they like you
they’re going to call you in for a
meeting you’re going to come in for a
meeting they’re going to just scope you
out you know you’ve written a great
thing on paper and now they want to see
who the person is who’s presenting this
idea and they’re going to challenge you
on your business plan and they’re going
to challenge you on your financials and
you better have an answer for everything
every number in your financial statement
you have to have a reason for and I know
a lot of it you’re you’re picking out of
the air but you have to be able to back
it up where you’re spending the money
to be clearly defined how much do you
need and where is it going – and why do
you need to spend this much money on
this initiative you have to have solid
answers to that
if you waver you’re not going to get the
money they’re not going to think you
have the confidence to build this thing
up so practice drill it be able to
explain every single number every line
in your executive summary in your
business plan you have an answer for
practice practice practice and that will
help you win the pitch if they like you
so that first meeting goes well the next
thing we’re going to talk about is
evaluation now that should already
either be in your business plan or you
have a clearer sense of what it’s going
to be because if they don’t like your
valuation then they’re not going to find
you before the waste any more time they
have to know how much it is that you
want and how much of the company they’re
going to get for I know what your bottom
line number is you know what you are
willing to accept and what you are not
willing to accept what you’re going to
walk away from if you can agree on that
all of that they like evaluation they
like your plan they like your meeting
you all of that’s going really well the
next thing you’re going to do is do
diligence and this is usually a couple
weeks building it they’re going to dive
deeper into your business they’re going
to learn more about your industry learn
about your competition they will ask for
more records and information for your
company if you have an office they’re
going to want to see it you have a team
they’re going to meet them they’re going
to dive as deep as they can to get to
know your business if all that goes well
then they’re going to think about what
are the holes that you need to make this
thing really take off so for example you
might not be the best CEO for this
business you know if you have some
software company maybe your best place
is going to be leading the tech team but
not actually growing it as the CEO that
might be the advice that comes back and
that might be a deal breaker are you
willing to step out of your role as CEO
for somebody who’s actually built up a
software company before and take it to
the next level they’re going to come up
with a list of suggestions to help you
grow your business this is how they see
it growing they’re going to give you X
amount of dollars and you’d like to see
these changes made some will be now and
some of
in the future but this is their
direction you have to be on the same
same page
you have to believe in that same vision
with them if everything is good if you
agree they’re going to give you a term
sheet they’re going to say this is how
much money we’re going to invest this is
evaluation and you’re going to have a
limited amount of time very short to
make a decision yes or no because what
they don’t want to happen is you shot
the deal so you get a term sheet from
one VC and then go to another one and
say hey this VC gave me this deal so you
can you do better so you have a really
small window to make a decision and then
from there you say yes the one that you
like and you go forward so that’s kind
of a twosie of how to raise money from a
venture capitalist
the biggest challenge typically is right
up front because 99% of business plans
don’t get pulled in for that first
meeting so really do a good job with
your executive summary with your
business plan
the management BIOS the team you’ve
built and the the financials and
hopefully some revenue momentum and now
give you your best chance of getting
that first meeting and then it’s up to
you to seal the deal if you have any
more questions about it leave it in
below leave in the comments and happy to
walk you through it that’s kind of a
high-level overview of the whole process
in a couple minutes for those are you
watching like the video thumbs up below
I’ll do more for you and I want to hear
we have to think leave a comment
underneath let me know you have a
question leave it below make a video
response for you guys thank you so much
and I’ll see you soon
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