Partnering with a venture capital firm may be an ideal way to obtain financing for your Tennessee business. However, only a handful of companies will actually receive funding from this type of investor. It may be possible to improve your odds of receiving venture capital by understanding what investors look for when deciding which startup businesses that they want to work with.
Is there potential for long-term growth?
As a general rule, venture capitalists are more likely to invest in companies that aim to disrupt the status quo. This is because these types of businesses are the ones that are most likely to grow at a rapid rate over the next several years or decades. If your company is able to outperform the market, investors will be able to earn larger returns on their capital. Therefore, any pitch that you make to a venture capital firm should include a section on how you plan to scale your business over time.
Does your company have a track record of success?
An investor is going to want to see some proof that your idea has a chance to succeed. For instance, you could point to the fact that your product generated $1 million in revenue in the past year. It may also be possible to highlight a growing customer base, the presence of successful franchises or any awards that the business has won.
Who leads the company?
Venture capital firms tend to fund companies that have a strong leadership team that oversees operations on a full-time basis. Ultimately, they want to know that whoever came up with the idea for the company will be able to execute their vision successfully. A business formation & planning attorney may be able to help you decide who should be part of your leadership team.
An attorney may be able to help you analyze the terms of any tentative agreement to invest in your business. This may help to ensure that you understand your rights and obligations after the deal is finalized.