It’s one thing to decide you want investor funding. It's another to actually get it.
Your first step is to get your tech startup noticed by the investors you hope to woo. That can be tricky, so let's turn this over to the pros. Here are the top three ways to attract investor attention, as told by venture capitalists themselves.
1. Show Some Impressive Early Results
The number-one thing a business can do to attract investors is to achieve traction in the business, says
George Popescu (@GeorgePopescuUS), a
partner at VC firm
To put it another way: show the real results of your work.
Popescu says the best way to do this is by getting visibility in the media. Speaking of his own experience as an entrepreneur, he says, “I got 143rd on the Inc. 500 ranking and number-one fastest-growing company in Boston per the Boston Business Journal.”
The result? All the VCs in Boston wanted to meet with him and his team.
Traction can be rapid growth, customer acquisition, profit, industry accolades, or anything that helps suggest to investors that your business is on its way to the top.
2. Aim Big
Ariel Arrieta (@aarrieta),
CEO and managing partner of startup accelerator
the most important thing when investing is establishing the metric for the future value of the company.
This metric, Arrieta says, can show everything, including…
- The size of the opportunity.
- Marginal costs.
- Business model.
- Analysis of competitors.
- Execution capabilities.
- Deployment capabilities.
- The ability to scale.
“With all this data, validated or estimated as much as possible, we may determine the growth drivers,” says Arrieta. After all this calculating, if the potential value for the company is high, it has his attention.
The takeaway? If you’re just trying to serve the local market or a small niche, VCs might not be your best funding option. They want in on game-changing ideas that can transform the business landscape.
3. Follow Up
“View funding as a long-term process,” says former venture capitalist and
Never Too Late to Startup
Rob Kornblum (@rkorny).
After all, if you’re successful, he says, “You’re going to be with your investors for a long time.”
Kornblum says that potential investors want to see your business perform over time and hit critical milestones. So if you manage to meet with a VC but don’t secure funding right away, it could just be a matter of timing.
Follow up with them, Kornblum suggests. Send a thank-you email after the meeting. As your business progresses, let them know about your achievements to keep the relationship active.
For more tips, read how other entrepreneurs secured funding in “VC Funding Success Stories: A Conversation with Krista Morgan and David Bitton.”
Meet the Experts
With more than 10 companies under his belt, George Popescu is an experienced entrepreneur, startup advisor, and investor. In addition to investing at LunaCap Ventures, he’s also editor in chief at Lending Times.
Ariel Arrieta is a serial investor and has helped hundreds of companies in the United States and Latin America grow, expand, and get off the ground.
Rob Kornblum has spent 25 years building high-growth businesses and supporting entrepreneurs. He’s a former venture capitalist, but continues to mentor startups privately and at various accelerators. He also runs the Start Launch Grow blog.