As an investor in various accelerators and incubators in Canada and the U.S., including The Next 36, I often meet young or first time entrepreneurs who are raising venture capital with little understanding of how VCs operate. There are a few key points that new entrepreneurs should consider when approaching a VC for funding:
Venture capital is not for every business The ultimate goal of any venture fund is to make a return on their investment of 10 times. VCs like to look at businesses that are based on big ideas and target an extremely large market, address a pain point or area ripe for innovation, and are infinitely scalable. Now, think about your business. Does your business address these three key points for a VC? Is it in the area of expertise of the VC you are approaching?
VCs want to see committed, focused and passionate entrepreneurs The founding team is a vital consideration of a potential investment for a VC. They want to know: is the founding team passionate about the idea? How does their experience play in? Does the founder have the ability to attract a great team?
Read more from Financial Post