Venture Capital 101

Raising venture capital can be just plain scary. Making the VC rounds is almost always intimidating, particularly for new entrepreneurs. A business model that seemed so sensible at home wilts in front of the skeptical suits. Or you quickly learn that your "novel" idea has already been done to death. The odds against you walking out of the VC office with a check are daunting indeed. So before you make those consultation appointments, you'd better be prepared. Ultimately, obtaining funding all comes down to selling your business. If you have a vision, you must learn how to share that vision with the most sophisticated of investors. Investors like David Cremin of Zone Ventures have heard literally hundreds of pitches from hopeful entrepreneurs. He knows a good pitch when he hears one and he's willing to share his advice to give you your best chance for securing that startup capital.

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If you don't have a great idea, your business is sunk before it's even started. "You need an idea that no one else is doing," Cremin says. "An idea that you are specifically connected to - what's your background, why you are perfect to do this job. You should really know the market that you're going into." That requires a little research. Look around to make sure your idea is unique and that you've picked a market large enough to produce the kind of impressive financial returns the venture capitalist craves. "Venture capital is risky money and we want to see higher returns for the risk," Cremin advises. "We see a lot of plans that just aren't unique and don't have that far-reaching, explosive growth potential. If you want big markets, you want an area that no one's working. These are the challenges. An entrepreneur meets a challenge a day."

Set Yourself Apart

Nothing is new under the sun and even the most unique idea will be co-opted in some way. Find out early who your competition is and figure out a way to differentiate your business plan. "Making sure that you know your competitors, inside and out, is one of the best things you can show a venture capital firm," Cremin says. That VC firm will be looking out for your competitors - you'd better know them too and have a plan to do what they're doing - better, faster and more profitably. Figure out why your business is different and why your focus will bring paying customers. It's a sure bet the VC suits won't do that job for you and they'll quickly find any weakness in this area.

Crunch the Numbers

There's a misconception making the rounds - Internet money is NOT easy money. Venture capitalists are going to want to hear a thorough business plan that ends in profitability. "You have to find a business model that has the potential to make a lot of money and that may be different from other business models," Cremin advises. "It's in the creation of a unique business model that you might find interest from a venture firm." No one said finding funding would be easy, but the best entrepreneurs know how to sell their ideas and build confidence in their ability to run a successful company. Just remember that securing funding is the first of many hurdles the entrepreneur faces. Growing that business is a tough job, but watching your baby grow through your efforts is one of life's most rewarding feelings. You need that funding - get started now!