Ways to land venture capital funding

Many prospective business owners are looking to venture capital funding as a way to get their business off the ground. The reality is that venture capital funding has slowed down considerably, but there is some available. However, it is crucial the in order to capture funding today, entrepreneurs will have to do a lot more than present a lucrative business model and pick the right management team. In today's market, venture capitalists are increasingly becoming attuned to a business' ability to manage the rate at which they use investment dollars. This means that since it'll likely take longer for companies to make it big or get bought out, they'll be expected to make do with less for longer.Savvy small business owners must then understand the ramification of this and plan accordingly. To help land venture capital funding, here are some "do's" and "don'ts":

• Do look out of the box-It is important to look for fund changes. This is because although venture capital firms typically stick to certain investing themes and industries, those criteria may change with market conditions. This means that a venture capital firm that would not have given your business proposal a glance a few years ago may be more willing today. Conversely, the venture capital firm that may have been your best bet a few years ago may no longer be interested.
• Do network-You should always be networking, to keep informed of the changes within the venture funding community. You should start networking with likeminded entrepreneurs and focus on those who've successfully landed venture capital funding. In addition, it is critical to look at trade journals and scan new business announcements to see who's giving, as these can be a reliable source of industry information.
• Do prepare a business plan-You should keep in mind that many venture capital firms won't crack open your business plan. Instead, they'll base their decision to provide funding on what their instinct and the contents of your executive summary. However, business plans are vital. Experts agree that the discipline that goes into writing one will really help you develop, and think through key issues, in your business.
• Don't waste a venture capital firm's time-It is important to understand that venture capital's are given the task of going through tens of executive summaries each day. You need to do them a favor; and keep it simple. You want to answer the following questions in your executive summary:
  1. What problem are you trying to solve?
  2. Why are you uniquely qualified to solve it?
  3. Is it a good business?
  4. What's it going to cost?
  5. And how long is it going to take?
  You should avoid flowery language and be as succinct as possible, Davis says. Remember that the venture capital does not want to have wade through the language to try and figure out who you are.
• Don't overstate your company-You want to present your company's addressable market, not just its total market size. You want to cite the revenue your company could generate if it captured 100 percent of the market. In addition, entrepreneurs tend to downplay their company's risks while exaggerating its benefits. That's a mistake, because the more honest and open you are with potential investors, the more they'll respect your ability to manage the business.
• Don't rely on government stimulus-It is important to keep in mind that landing stimulus funds can be a boon for businesses (and attract the gaze of some investors) but you should remember that they do not typically represent a permanent revenue stream. The bottom line is that you might not get it, and if you get it, it may not last.