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Raise Money with VC Investors

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I am the CEO of THEGAMENET and I have pitched our business to many VC (venture capitalist) investors.

This is what I learned.

Six Key Areas to Address

  1. Proof

    Have data to support your claims for market opportunity. Demonstrate and quantify the strength of your Value Proposition. Is your project a "nice to have or a must have?"

  2. More proof

    Have a revenue or operating model identifying important milestones. Ideas should have recurring revenue. Rodd said he invests for 3-5 years in the future

  3. Know your capital requirements

    These days, doing more with less is better because a Venture Capital firm will theoretically get a better return on its investment

  4. Current activity

    Have existing traction – customers, product development and some momentum – "some wind in your sails, if you will," Rodd suggested

  5. Your team

    It’s no longer about a flamboyant CEO. The key person must have a vision and domain expertise. Does that person understand the market? Does that person understand the solution?

  6. Exit strategy

    Most exits are through acquisition. What is your exit strategy? Know who is likely to acquire you and why you are valuable

Execution Risk not Technology Risk

VCs want to take execution risk, not technology risk.

Show a strong business plan with a clear timeline and active team. Demonstrate your technology and development process.

The investor's only concern should be: "Can you execute?"

VCs do not Solve Your Problems

Venture capitalists will never know your business as well as you do.

They cannot solve your problems. You need to.

If you say what your problems are, also say how you will solve them. If the VC knows someone who can help, he will say, but do not expect him to.

VCs do not Fund Salaries

Do not say you need money for salaries. This is not why a VC will invest in your company.

Tell a venture capitalist where you started, how you got to here, and why you need money to get to way up there!

Revenue not Technology

Venture capitalists are not technically savvy. You are.

VCs are business-savvy, that is where they complement your skills. They know how to raise capital and how to take you public.

Don't explain your product's technical strengths, explain your product's revenue potential and how it is unique in your market.

Ideally, VCs want to invest in an industry-changing technology protected by patents.

Talk about Growth

A VC wants to hear about growth and progress. And not just revenue growth.

How is your team growing? How many new users did you acquire? How many customers visited your place of business?

Look to Friends and Family First

First look to your friends and family for investment.

If you cannot convince your friends and family to invest in you, how can you expect to convince a stranger to invest?

10 in 2 Rule

Venture capitalists look for deals that will give them 10 times return in 2 years. High risk and high reward.

They expect 9 out of 10 of their investments to fail.

Train Leaving the Station

A successful pitch creates the image of a train leaving the station.

"This company is leaving, and I want to be in while I can still get in" should be in the VC's mind after you finish speaking.

It is Inevitable

You will make millions. With your solid business plan, great team and ideal timing, your business will explode in the next six months.

It is inevitable.

This is the message.