Advice for Tech Startups Seeking VC Funding
There are hundreds, if not thousands, of failed startups for every successful startup exit. So, you want to succeed in the technology sector as an entrepreneur. In that case, it will be helpful for you to contact venture capital advisory companies like Waveup. They can explain how much your company can be valued, what this valuation depends on, how many shares to give to an investor in different rounds, and how to communicate with investors before and after the deal.
What Are Technology Startups?
A technology startup is a business that exists to market technological products or services. Tech startups are usually shifted to the IT field. Based on the latest technological developments, such projects offer solutions to many pressing problems in various areas. In most cases, tech startups involve the creation of a physical product, which can then be reproduced many times over.
What Is Venture Capital Investment in the IT Sphere?
Venture investment is acquiring a smaller share of a controlling stake, charter, or share capital in young companies with high potential. A venture fund investment presupposes a long-term capital investment, resulting in a staggering profit.
Half of all venture capital funds are invested in the IT market. They don’t have competitors in inventing new services, products, and business processes. Several factors explain the high rate of investment in the information technology segment:
- low entrance threshold;
- lack of customs and regulatory barriers;
- a short development cycle, rapid performance without investing in the development of infrastructure;
- lack of physical assets;
- simple relocation of the startup team;
- a high rate of return relative to the amount of invested capital.
Good, vital IT projects have a higher entrance threshold. International VC funds offer different support conditions (financial, operational, administrative, with the involvement of business angels), working with projects at various stages.
Practical Advice from Venture Capital Consulting on How to Get the VC Support
To win the favor of a venture investor, it is necessary to have an exciting idea that meets the needs of the market and has a business plan. Not so many funds are ready to deal with its financing for nothing.
Before starting the search for investments, it is essential to prepare. Professional consulting to venture capital can help. The company of professionals will help calculate the project’s economics, make a pitch presentation, and professionally support your strategy development by reviewing some valuable tools. And if you already have a business plan but the results could be better, a team of professionals will help to correct the product, business model, or cost and improve the metrics.
You need to prepare a presentation for the investor and present your idea, so there is a desire to invest in it. Discovering new things and proving that humanity needs innovative ideas is crucial!
- Choose a venture capital fund. It is better to apply to those funds that specialize in projects in the IT segment.
- Presentation for fund representatives, concise presentation of the material, enthusiasm, professionalism of the team, and profitability are essential. The investor’s attention depends on how elaborate the presentation is.
- The project’s success depends on negotiations. The investor pays attention to the startup’s founder’s preparedness, ambition, and determination. His task is to understand the limits of the startup’s capabilities and willingness to cooperate.
- A financial model for several years must consider profits, expenses, all movements of financial flows, and methods that can be used in emergencies. For a venture fund, it is crucial to understand the ratio of risk and profit in the future.
- Contract. When concluding a contract, it is necessary to seek the help of a lawyer who can evaluate the contract and explain its nuances and possible pitfalls.
After studying this manual, you are ready to take your business to the next level and have presented your application idea to the right investors. Before looking for investors, creating a plan and making financial preparations are necessary. Let the Venture Capital advisory company help you to understand how to find investors for your technology startup.
