Ryan Allis, CEO of marketing and online communications firm iContact Corp., shares some interesting lessons on how to attract investors for your business in his new book “Zero to One Million: How I Built a Company to $1 Million in Sales … and How You Can, Too.”
According to Allis, to increase your chances of venture capitalists investing in your business, you must:
- Venture capital funding is ideal if you are looking to raise $500K and up and you have a business in the following areas: technology, biotechnology, energy or consumer goods space with a potential return greater than $50 million in the next five years
- To maintain a good portion of ownership for your business, yoi need to have a high valuation before you accept the funding.
- Be introduced by someone they know. With thousands of proposals and business plans they receive, you stand a better chance if you have been refered by someone these VCs know and trust. Find other entrepreneurs these venture companies have funded before who can recommend you. Or other investors they’ve done deals with or lawyers they’ve worked with in the past. They don’t want “unreferred plan” (much like the unsolicited book proposals for publishers).
- VCs generally look at your capacity for entrepreneurial leadership, the ability of your business to attract talent, relevant industry experience of the team, as well as marketing and sales orientation.
Whether you are looking for venture capitalists or angel investors for your business, be sure to have:
- A solid business plan;
- Experienced advisors
- Team with market knowledge that has proven it can execute
What Allis said in his book rings oh-so-true:
“It can be difficult to obtain funding for your business as an aspiring entrepreneur. Many times you’ll have to present to dozens of banks and investors before you can find someone willing to fund you. Other times, you’ll have to bootstrap the company and grow it organically as your sales grow.”