What venture capitalists look for?
Do you have a business idea and don’t have enough money to start it? Well, you are not the only one! …but don’t despair! Maybe after all you have what is needed to start this idea.
After “flying” as a business angel for two years now and after going through many conferences and reading many materials about venture capital and business angels, I’ll try to share with you the criteria that venture capitalists or business angels look for when deciding about whether to invest in some business idea. So before deciding whether to contact some VC or BA look at these criteria before doing further steps:
- It’s all about entrepreneur – it is very important that you are the person with a drive, looking forward and that you are being realistic about your ideas. Also, the most important thing is – you have to believe in yourself and in your idea, because if you don’t, no one will. Venture capitalists definitely won’t!
- Do you have a vision – it’s not about the vision that you have to write in your business plan vision, it’s about do you really have a vision! You will come to a situation where you have a minute or two to get the venture capitalist interested. So you have to be prepared to say something short that will take his attention to you! Venture capitalists like to call it – a glare in entrepreneurs eyes. They like to see your energy!
- Write your own business plan – writing a business plan is not something you should do by downloading a template from the Internet and filling it’s columns, although that’s better than not writing a business plan at all, but instead try to write about all the aspects of your business idea and about your future company the way you see it. It doesn’t have to consist of every single column from traditional business plan. Write what you think is important and make it interesting and sound. That way you will be able to show your original ideas in details to venture capitalist and also you will have your ideas on the paper and it will be great to revise them through the time as your business develops.
- Focus on growing market – when looking for an idea to invest in, venture capitalists look for an idea that has fast return of investment. It is mostly possible only if your idea is focusing on a growing market, so if you want to start a business in agriculture industry, don’t expect venture capitalist to invest in your business idea or at least the investment is less possible to happen. You should probably turn your attention to bank loans and such funding. But if your idea is focused on markets like media, software, biotechnology, pharmaceuticals, VoIP, e-commerce, video games, etc., you have a possibility to get some capital from VCs.
- Scalable business – most VCs like business ideas that can scale during the time. It means that if your idea becomes successful, your expenses will remain the same, while your revenues accrue. For example, if you intend to run a hotel business, you will have to employ more work force if you intend to open another hotel. So your expenses will accrue as you try to raise your revenues by opening another hotel. So that’s not scalable. But if your business is focused on developing some kind of software platform, you could sell that platform to more and more clients by not raising your expenses. So that’s scalable and VCs love that kind of investments!
- FFF – the final point, but not the least important is connected to the first point …you should be able to at least start your idea. For example, a prototype of a product or basic functionality of some IT service should be created to have something to show to those you need money from. FFF stands for family, friends and fools …and if you don’t have enough of your money, you should be able to get some from FFF – if you are not able to collect some cash fro them and to make them trust in you, don’t expect someone who doesn’t know you in person to give you capital.
After reading this short post, and you still think you have a chance of getting some money from VCs, I recommend you to read a book The Masters of Private Equity and Venture Capital written by Robert A. Finkel. It will help you to get into idea of venture capital more before deciding to create that special “business family” with VC.
Time is free, but it’s priceless!
You’re late to your business partners? You sleep over important stuff? You’re always behind schedule? Getting anxious because you loose control over your time?
Well – wake up, shake your booty and get a grip of your life! Your time will pass and you will realize you haven’t achieved your dreams, so get MOVING!
Are you awake now!? Well let’s start.
- Wake up early! – to get up early doesn’t mean that you should sleep 4 hours/day – it’s better to get up at 9am after 7 hours of sleep, that to wake up at 7am after 5 hours of sleep. But still to get up early like 6-7 am is important, because you get time to prepare for your day and when the rush-hour starts the dullness is gone! But to be able to get up early and have at least 7 hours of sleep, “time-to-bed” is 11pm.
Some will argue that they can’t go to bed before midnight, but practice creates habits. In addition to sleeping habits, forget “power sleep” – 30 minutes of sleep during the day. They make your body relax to the point that it takes time to get to action-ready state, and it makes it even harder to go to bed early.
This point is really important – you’re time-managing success will be limited if you don’t achieve this sleep issue. - Plan! – don’t talk about your plans, make them. Start filling your schedule and try to equip yourself with important tools that help you on that – it could be MS Outlook, Thunderbird, Google Calendar or any similar calendar tool. Also, use your mobile phone – most of mobile phones are equipped with calendar tools as well, so set-up synchronization between your desktop calendar and mobile phones, it will be much easier to have up-to-date calendar in any moment.
- Take notes! – notes are important because they are not connected with any specific date, but they memorize important facts for your tasks and missions. What is important about notes is you should take them instantly – at the moment you become aware of important issue that you should memorize – put it down to notes. Keep track of few different notes:
- your job notes – everyday notes help you on remembering important data for your job, for example – take a note of an address that you will need to deliver some package to.
- your private life notes – for example – name of cartoon that your kid wants for his birthday
- your ideas – keep track of any idea that comes to your mind and that could be useful later on. This list is quite subject to erasing things, because many ideas drop from the list soon after you think twice about them, but sometimes you won’t have chance to think twice about them if you don’t write them down.
- Control your time wasters! – it’s not fair to point out your finger on anything specific as a time waster, because anything can be a time waster if you spend on it more time than you should. It is true that in average – internet, playing video games, television and mobile phones are one of the biggest time wasting threats, but reading books, doing sports or having meetings can be a big time wasters as well if you do it to much.
- 80/20/80 rule – since time is a limited resource, try to focus on your important things – spend 80% of your time on 20% of your most important things that bring you 80% of benefits. It’s not easy to always stay in these measures, but keeping them in your mind helps a lot.
- Care about your family! – there should be nothing more important than your family, so put your family in that 20% of most important things in 80/20/80 rule. It will make you feel better if you care about them and this kind of satisfaction makes you motivated for other stuff.
- Find a life partner! – if you don’t have a partner, look for one – it sounds funny to some of you, but it is in human nature to have someone to share your intimacy with. This is the opportunity to have someone honest by your side who will tell you of your mistakes and flaws. And when you find a partner, don’t try to change him/her, change yourself instead – it’s more fun!
- Get moving! - nothing above won’t help you if you don’t start with action, so go to bed early, get up early, make your plans and notes and start to work on important tasks by controlling time wasters.
It is estimated that
it takes 16 to 21 times of repeating a task to make it a habit
so it won’t come natural after a first day, but after some period of time you will plan your time without thinking about it. Good luck!
If you want to read more on this topic, I recommend a very affordable book Getting things done written by time organizing guru David Allen.
How to adapt your business to changing market?
In recent decade the business environment has changed dramatically. Marketing has become more than just putting a poster in front of the store, sales move mostly online, number of products and services has multiplied numerous times, so customers become more selective. Global economic changes become more frequent, so it becomes vital to be able to adopt to today’s market. If you feel that you are loosing your market share or that the market size is shrinking, so you feel it in the loss of the customers and in decrease of revenues, you should consider some of the possible following steps:
- change your niche - when the size of the market that you are in is decreasing, it’s best to change the market. But changing the market doesn’t necessarily mean that you have to go in the opposite way of the current market. Most of the times it’s good to stay in the same industry but just slightly focus on a different customers. For example, I am working in real estate and construction business, but I focus on residential buildings, so possible changes of my business could take my company in few directions. It’s possible to invest in a small family hotels, it’s possible to invest a luxury tourism villas, it’s possible to invest in business premises, or to invest in some sport facility for renting. So it wouldn’t be complete change of my niche, as I would still be able to use my knowledge gained in real estate business, but I would focus on different market and different customers. Certainly, if you feel that the niche you are in is completely diminishing, it’s best to change the niche completely. So it’s very important to be able to transfer your business to another market.
- change your way of selling - working in sales today is definitely ungrateful job. If it took ten potential buyers to sell one product, today it takes hundred of potential buyers to sell one product. Sometimes you become frustrated for working more and more and selling less then you used to. There is no strict formula that will help you enforce your sales, but there are few possibilities that will help you make changes in sales:
- change the place you advertise - if you advertise on one site too long, customers that visit that site have probably seen your advert many times (actually, too many times), so try to consider another site, because probably you will reach the customers that never saw your advert.
- use some other media – if you use TV, try using radio, if you you use Facebook, try using Twitter or YouTube. But one the most important changes that you can make in advertising online is to change from images to video or interactive content. Customers are becoming more and more demanding, so they like the feeling that they can find out all the information from the comfort of their chair. So it was great thing to present your product by showing it on pictures. But customers want more! Presenting your product on video, you can show your customer how to use the product and the customer can have much better insight to the product before buying it.
- change your design – this is something that should be planed carefully. Changing design of your product or design of your presentations and advertises could affect people to have a feeling that there is something new about your company and product. But be careful! If you change your design, especially web design, try not to completely change the functionality of your site. People like the feeling that they understand something, so if your customers got used to some functionality of your web site and they like that functionality, don’t change it!
find ways to cut your costs – I know, this is hard one. Many entrepreneurs have gone through times when the profit margin was good enough, but many have later on experienced a decrease in profit margin. It’s a natural path of business development – if a profit margin is good, then many will try to take a piece of cake in that industry. So with a competition growth there is a decrease in prices and profit margin. Soon after a decrease of profit, unorganized companies close their doors, leaving others to compete. How to survive in that environment? The best way is to try to structure your processes and to cut your costs. To cut the costs the entrepreneur should revise every single cost that affects the cost of the product and should try to find other solutions that will cost less without loosing a quality of the product and service. Best way is to introduce some technology solutions that will enhance and quicken your operations, and that will free more time for dedicating to customers.
Sure, there are other ways to keep the pace with the changing market, but the important thing is that we and our company have to change with the external changes – we have to adapt.
Please feel free to comment or add any other ways that would help to keep the pace with current market changes.