Getting your startup funded might be a pain in the ass. It can be tough to decide if an accelerator, an incubator, or a VC is the right fit for you. If you stick with the VCs, there are some things you should know. Venture capitalists are sometimes known as investors that give you headaches. Other times, they prove to be the ones that were a stepping stone towards your startup’s success. It’s tricky to get them to invest in you. So, what exactly do you need to do to make them believe in you?
Make them believe – is it possible?
Even if there is money that comes from venture capitalists, that doesn’t mean it’s easier to get your startup funded by one. The competition is higher, and more fierce. It all breaks down to making a VC believe in your business.
When you decide to invest your time in something, it has to be an idea that resonates with your belief system, which is personal and has meaning. Satya Patel wrote a great blog post where he talked about the “three qualities that enable a startup to create emotional resonance with an investor“. Let’s see what those are.
People create emotions in other people
[ Photo credits: Hector Parayuelos’s Flickr ]
VCs work best when they are surrounded by people they love to work with, just like anybody else. While one VC might believe in your startup idea, one might disagree with you, and this is simply because either your story did not touch him, or there was no chemistry between you two. Satya says that “it’s no surprise that most VCs will tell you that they invest in people first”. An emotional connection is important in business, too.
The potential of your business
This is ultimately why a VC will invest in you: they see potential. They invest money in you, so they want to see actual results. The potential is either given by the opportunity of your product/service on the market, or the mission of your startup. This is the part where you’ll have to convince the VC that the problem you’ve identified needs to be solved, and that you have the best solution to do that. Most venture capitalists say no to products/services, because they can’t relate to them.
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Early stage companies don’t have proof, so they should focus their attention towards other types of investors.
Venture capitalists are human beings, too
Our everyday actions are influenced by how we feel in a particular day, by the things we go through – basically our whole life experiences have an impact on the decisions we make. VCs are no exception. Ciarán O’Leary is a VC from Berlin, and talks about in this article about how being human can affect a VC’s judgment.
I will end this article with my favorite quote from Satya’s article: “the only path to a VC’s money is still through emotion“.
Maybe not all venture capitalists think the same way, but you need to keep in mind not to take anything personal when it comes to business, because most of the times it’s not. Have you had any experience with VCs so far? If so, how did it go?