Our Guide To Securing Venture Capital Funding

Venture capital funding is an option if you’re looking to get a new business started. It can also be a great path for those businesses that are on the brink of expansion too. If you’re looking to secure venture capital funding for your business then this is what you need to know.

What is venture capital funding?

It is provided by investors to early-stage companies and start-ups that have positive long-term growth potential. It’s ideal where a company needs cash but also expertise to help spark that all-essential growth. It differs from something like private equity because PE firms tend to be looking to invest in businesses that are already well established. Venture capital funding sources are usually investment banks, wealthy individuals, and other financial institutions. Firms pool resources, which means they can have more to invest (upwards of £250,000) than an alternative, such as an angel investor.

How to secure venture capital funding

• Is this the right investor for your business? Venture capital is a great idea for many businesses but won’t be right for all. In order to be successful at securing venture capital funding you’ll need to have some basics in place, including a strong brand team, robust sales channels and positive growth potential.
• Which venture capital firm is going to be the right one? Each will have a specific area of interest, whether that’s green tech or financial technology. Pick a firm with interests that align with what your business does. It’s also a good idea to look at the amounts a particular firm will invest and make sure this fits with your goals. For example, a firm that only invests millions won’t be a good fit if you’re looking for a smaller amount.
• Create a shortlist of potential investors. When you’ve done your research you should be left with a shortlist of 10 firms that you can approach – and who are really well suited to your business.
• Look for a way in. The best way to approach any investor is through an existing connection. Could a friend of a friend – or a colleague of a colleague – help? Look at your networks to see where there might be an open door. If you can’t find one, attend events to see who you can get in front of and, if all else fails, send some emails.
• Refine your pitch and brand message – and hit send. This is the process of introducing the firm to what you’re looking for and why it’s a worthwhile investment. Focus on what your business does and how it’s performing, as well as the quality of the team. Avoid anything too wordy or data-filled at this stage.
• Get ready to negotiate. This is where you will hammer out the terms of how the investment will be made in your business – via term sheets. Some of the key sections in a term sheet include the financial details of the investment, where the power lies, as well as the exit strategy.

Venture capital funding can be a big boost for any enterprise – these are the first steps to securing it for your business.

Achieve funding with SPRK Capital

SPRK Capital are a leading provider of R&D tax credit loans and grant funding loans in the UK. We support innovative SMEs by giving them access to their capital when they need it.

Get in touch today, and SPRK a conversation around your funding needs.