Raising Venture Capital

1. Get it right from the Start:
The terms of your first negotiation are very important. Not just because of the impact initially, but because many of those same agreements are likely to carry through to future negotiations so, if you agree to some poor concessions initially, you’re likely to suffer from these negotiations in future and it could slow your path to achieving fast capital.
2. Raise more than you need:
You’ve probably done all the sums and know exactly how much funding you need and don’t want to dilute your share of the business. Don’t be too worried about this; it’s always better to raise a bit more capital than you need. In the scheme of things if your business venture is very successful any dilution of your share will be overtaken by the success of the company. You really don’t want to be back out trying to raise more capital when the most important thing is to run your company. Raising capital fast can be difficult so plan ahead, when your bank balance is getting low, you’re going to need to just keep working on the business instead of shifting focus back to the funding game.
3. Orchestration is important:
It is important to keep all the interested parties moving along at the same time. If you don’t you may have offers coming in from VC’s before you’ve been able to assess what others have to offer and very often they will give you a deadline that puts you under pressure. If you can keep them all moving a long at the same time, you can create competition between them and therefore get the best deal. This is the best way to raising fast capital.
4. Beware of getting tired: Raising capital fast can be a very tiring process, involving numerous meetings and having to absorb huge amounts of information and different unfamiliar terms. Even in good times funding can be hard work, but in recent times it’s been like climbing Mount Everest! Be sure to try and maintain your energy levels for the whole process, at the final stages of the deal, some of the most important terms can be added and you need to be on your toes. Whilst you want to raise capital fast, going to fast and getting tired can lead to very expensive mistakes.
5. Use the right Lawyer:
You need a lawyer who is experienced in the field of venture financing. The deal is very important to you and VCs normally have very clever people who are used to negotiating deals all the time. They do this for a living, you don’t. You need someone that has competency in this area. A good lawyer, will save you time and lots of money, and remember it’s normal that you pay the VCs legal council as well so your going to have to pay anyway!
6. Like your VC as it will be your partner:
If you get the wrong VC partner your business journey will be a nightmare. Remember your VC partner will very likely be with you until the end of your journey, whereas you may part with other partners along the way. The right VC partner will make your business secure.
If you going through the process of raising capital and it’s taking too long and funds are running low, contact AtPledge we will be sure to help with any short term funding requirements: Tel 0800 810 1111 or contact AtPledge online.