| Do not be frustrated if you have failed to raise | | | | had good growth for next 2 years. I went to |
| capital from venture capital funds. Only a very small | | | | venture capital funds in the first 12 months for the |
| percentage of companies do raise capital from | | | | working capital and was turned back immediately. |
| venture capital funds - and in the current | | | | 2nd year into my business, I was approached by |
| environment, this percentage is even less. | | | | other venture capital funds to see how I was going, |
| Main Reasons rejected by venture capital fundso The | | | | and 3rd year into business, I was approached by the |
| deal is too small - many venture capital funds have | | | | same venture capital funds who were interested in |
| mandates - minimum investment would be $1 million | | | | my business - this was much easier as I was then |
| or $10m, if you are just seeking for a small capital, | | | | after expansion capital instead of working capital. |
| they will not talk to you.o New Company - start-ups | | | | So, rule no.1 is always build up your business first, |
| should go for alternatives rather than venture capital | | | | make it worthwhile then talk to venture capital funds |
| funds, there are specific start-up funding providers or | | | | - not raise the capital first and build the business. |
| investors or apply for grants.o Lack of existing | | | | Unless your ideas or applications are really |
| revenue - Look, let us be realistic about it - would | | | | state-of-art, and there is no shortage of great |
| you invest in a business that has no revenue | | | | concepts that have raised money from venture |
| established or a business that has 3 years of | | | | capital such as MySpace, Twitters or eve Facebook - |
| revenue. If you have made profit, even a small | | | | but all of them have demonstrated there is a solid |
| profit, show venture capital companies that. Some | | | | business- such as number of members, members |
| have said that it is 10 times harder for a business to | | | | growth rate - these are also regarded as company |
| raise capital without revenue.o Too Technical - You | | | | assets. |
| have the best idea but unable to express them in | | | | Remember, Hotmail was sold to Microsoft - because |
| plain English (or other languages) to venture capital | | | | it has millions of registered users - and smart |
| firms. Remember what Warren Buffet's golden rule - | | | | companies can use them for marketing purpose. So, |
| "Never invest in things you do not understand"o | | | | when comes to asset of the company, sometimes it |
| Relying on Corporate Advisors and Brokers - If you | | | | is not just the financial aspects, but what your |
| do nothing and rely on corporate advisors or brokers, | | | | company can really bring and that is your special |
| it will be impossible to raise capital. You have to work | | | | point. |
| with them closely, you have to improve your | | | | Some of the good examples are - maybe your |
| business, write press releases, advisors or brokers | | | | particular website has a specific target group of |
| can not do them for you.o Demonstrate that "I do | | | | visitors, I have a website with around 20,000 |
| not need the money" - ironically, venture capital funds | | | | members but they are all Chinese speaking investors |
| always like to invest in businesses that are already | | | | for instance, there are also some Hispanic news |
| sustainable or already on track - the businesses that | | | | websites which have very niche target audiences. |
| actually do not capital to survive but the capital to | | | | Maybe it is a product or service you are offering, a |
| grow or expand. If you can demonstrate that, | | | | good friend of mine has established a mobile car |
| venture capital funds will come and knock on your | | | | maintenance franchise, a small business initially but a |
| door. | | | | great idea, another business I have reviewed uses air |
| When I set up my business for the very first time, I | | | | to wash cars, again, a tiny business, but a very |
| could fund the business myself from my own | | | | interesting idea which can draw attention from |
| investments - I then grew my business from $0 | | | | investors even without the first revenue. |
| revenue to a profitable business in 12 months, and | | | | |