7 Must-Haves For Scoring Venture Capital Cash

Pile of cash

: In the past year, the venture capital funding pipeline has gone from a gusher to more of a trickle.

In the first half of 2009, just over 1,200 venture investment deals were made nationwide, involving about $6.8 billion, according to the quarterly PricewaterhouseCoopers/National Venture Capital Association MoneyTree report.

That’s compared to more than 2,000 deals in the first half of 2008, worth $15.2 billion.

With less venture money flowing–and fewer entrepreneurs scoring cash–what’s it take to make the cut? We asked three venture-capital investors to name the key factors that get them excited about a young company. Alex Ferrara of Bessemer Venture Partners, Maneesh Sagar of CT Innovations and Jon Elton of Inovia Capital identify their gotta-have factors for a successful VC pitch.

One important question to ask before you begin pitching: Are you really ready?

Elton says many entrepreneurs don’t understand the implications of taking on venture investors. These investors will have an equity stake in your business, have representatives on your board and influence company direction. VC investment also tends to drive the company toward either a sale or initial public offering within five years or so, in order to give the investors a substantial return on their money.
“Remember that VC dollars are very expensive and come with very high expectations of growth and outcomes,” Elton says.

Bearing that in mind, here are 7 must-haves for raising VC cash >

An Experienced Team

A Problem-Solving Product Or Service

Assets

Customers

Metrics

A Demo

A Plan

It may seem surprising, but the VCs report many of the startup managers who pitch them can't present a clear plan outlining what they would do with the money they're seeking. It doesn't inspire confidence when execs have only a fuzzy idea of how they would use more money to build their business.

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