8 entrepreneurial attributes that attract VC funding

In this era of a million startups and global venture capitalism, how does an entrepreneur attract VC funding for his or her project?

VCs often invest big in millions of dollars and have their own parameters to clinch the deal.

Entrepreneurs know that besides that ‘great idea of theirs’, there are other deciding factors that will draw investors to their project.

Investors are no longer individuals but are companies investing not just their own funds but also for clients, like in the case of Goldman Sachs, Morgan Stanley once financial institutions, Soft Bank etc.

Starting from the basics the following qualities could help ensure successful funding for a project:

The Idea

Your great idea or product must be good, fulfilling and should create a need for in a wide and acceptable market. You must vindicate the market for it and have well planned strategies to bring it to the market. How accessible are your markets, go figure.

The team

Surprisingly, a major factor that many entrepreneurs ignore or fail to pay the required attention to is their “TEAM”.

What investors are looking for is a team.

“They’re looking for the next big team. The team is the foundation of any successful startup, the fixed point from which all ideas and developments originate. Without a strong foundation, a startup will be blown and battered by the changing environment and, ultimately, crumbles”, precisely summed up by Tx Zhuo Managing Partner at Karlin Ventures.

Your entrepreneurial team must have the required expertise in their fields, should be able to work together putting aside personal feelings and egos for the common goal of success. Each team member has a vital role to play.

If your team already has a history of successfully working together, you have a plus point in attracting investments.

Human resources in your start up and anticipated growth requirements will be also be taken into consideration.

A cohesive team which can design, produce, market and sell your idea is what will bring in investments.

Expertise

Investors will give weightage to the entrepreneur and his team’s education, working experience in their respective fields. Many investors feel comfortable with a minimum of five years and above experience, although it is not a set determinant if you have good innovation record.

Dedication

How determined and dedicated is the entrepreneur and his team? Is his or her team willing to work all hours and put in 100% plus effort to succeed against all odds? No investor will put his money in if he feels the start up lack commitment.

Communication Skills

‘Can the CEO effectively communicate his or her ideas?’ Nin Desai, winner of the "2015 CEO of The Year--Illinois" award, stated.

She has rightly stressed the importance of communication skills, so it is not just the CEO but also his Core Management team has to be able to communicate clearly and effectively with themselves and within the industry, market arena and of course while pitching to the investors.

Let us not forget today we are living in a global market and ‘Communication’ is all important.

Adaptability

What will you do when ideas, market trends and other challenges crop up? Can you adapt and bring your product or service in line with changing and evolving trends and technology?

The investor will definitely be interested whether you can adapt or not and more importantly do you have the back up plans and resources to meet changing customer requirements.

Many investors work over a period of time initially with start ups and give valuable advice.

You and your team should give due consideration and co-operate with them. It is a vital relationship of mutual benefit to the entrepreneurs and the investor ensuring the due financial returns to the investor.

Marketing

A proper marketing plan and a good marketing team are essential. Your idea/product/services have to reach the consumer. Let us not forget it is a highly competitive market so a well thought out marketing strategy is important.

Of course providing your investors with a list of your present and future targeted customers will reveal that you have paid serious attention to this very crucial aspect of business.

Financial management

Money translates ideas into business. Money which is to be invested has to generate revenue for the investors.

The first thing would be a detailed ‘Business Plan’.

Financial plans for outlays and projected growth and sales should be well planned and realistic within your industry norms. Don’t get too optimistic. Funds are required till you break even or the increased investment for projected sales increase.

Reserve and contingency funding plans will increase credit scoring. Investors will appreciate financial honesty and appreciate your saving their valuable time with correct documentation and clear plans.

Homework on your investors will aid in a closer rapport.

Good personal credit rating of the entrepreneur and his team are a plus point.

VC funding will be entering after you have started your project. Investors will review the utilization of your financial resources so far. Quoting Ms. Nin Desai again, she states that investors will question whether the management team have burned through cash like there was no tomorrow in the hopes of finding more, or have they deliberately managed cash flow in ways that directly influenced positive growth?"

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