I was in the private equity and business finance industry prior to my business consulting career, and I learned a lot along the way in what makes for a successful Venture Capital campaign. Here are some typical mistakes to watch out for and some great tips to helping implement a successful Venture Capital raise.

Common Mistakes in a Venture Capital Campaign

• Glossy Business Plans with lots of pictures and graphics, with little substance.  We call these “MBA Graduate Plans” – they look good but little teeth or substance.
• Relying too much on an intermediary or broker.  VC wants to know how you think.  Be sure to use Small Business Consultants to help you develop a Business Plan, VC Proposals, Investment Overviews, Loan Packages and a Financial Strategy.  Use an experienced Loan Broker, specializing in VC, to introduce you to VC networks.  But you approach and negotiate (with the help of a Private Equity Law Firm) with VC.  They are principally interested in you, the entrepreneur, the founders and management.
• Not confident.  Confidence in your opportunity shows character- a major decision making element for VC.
• Shopping a deal, kills deals. Narrow your Venture Capital search to the top 5 firms for your opportunity, then approach 2 to 3 of them, one by one. If a VC firm sees excessive shopping of a deal, it significantly dilutes the deal’s attractiveness. It indicates you are not serious about them.

Tips for a Better Venture Capital Campaign

• Bring in a business consultant with solid experience in your industry from the very early stages of your company’s development. The experience and advice can help you structure and model a company to genuinely attract a quality VC partner.
• Develop a Financial Structure & Plan and correlate the Plan to a Strategy in identifying and approaching VC Firms.
• Find a VC Firm that will bring more than just money to the table:  Resources, connections, strategic partnerships, etc. in your Industry.
• Experienced Management Team, backed up by solid track records and successes.  “Sell” your Team.
• Develop  Funding Business Plans so your Business Concept is well developed. Then develop a Funding Business Plan customized to the particular VC group you are approaching.
• Be able to articulate your opportunity in 2 minutes.  Then VC might give an opportunity at an initial 30 minute presentation.
• Developed Product Plan, Marketing Plan and Strategic Plan so you can demonstrate realistic, quantitative data and projections.
• Prepare solid Executive Summary
• Highly defined, developed Market Niches.
• Demonstrate Competitive Edge and Barriers to Entry.
• Minimize Risks:  Strategic & Investment Risks.
• Grants of Stock may be the structure which Investors prefer; however, this structure can dilute your ownership significantly, while giving up some control in your Company’s decisions (depending on the amount of stock granted).  By contrast, options can be used to battle the dilution and control factors, yet still make an Investor happy.  Options are just as of value as stock; can be issued in agreed amounts; and the Investor participates after the money is invested based on the agreed option price- this aligns the Investors returns with performance.
• Be flexible with negotiations.  Have your Private Equity Law Firm do a run through VC Role Negotiation Session to prep your negotiating skills.
• Look for a VC’s track record and research their funded companies.  Does this meet your expectations and requirements?

About The Guest Blog Writer – Frank Goley with ABC Business Consulting

Frank Goley has an experienced background as a business consultant, business turnaround consultant, business plan writer, business plan expert, small business consultant, business coach, business plan consultant, marketing consultant, business planner and online marketing consultant, and seo consultant for ABC Business Consulting. He has been helping companies to succeed for many years. Frank wrote his first business plan over twenty years ago. He is an expert in developing business plans, marketing plans, funding plans, strategic plans, turnaround plans, web marketing strategies, and project specific business plans. Frank is the author of a business plan book, The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning, and he has over 140 published articles and e-books on business success strategies. He also writes the Business Success Strategies Blog and publishes the Business Success Newsletter.