3 Venture Capital Tips for Expanding Small Business

For many small business owners, the status quo is perfectly acceptable. Some look to expand as a chain store locally or regionally. However, for other small business owners, the sky’s the limit. And when a small business owner has dreams of expanding and going national with a product or service with that potential, venture capital may be the answer for financing that dream.

How does a small business owner with big dreams get VC funding? Here are a few important tips:

Find the Right VC Firm

In the quest to obtain venture capital funding, it is essential to find the right VC firm. There are thousands of firms in the US, and competition is fierce for their investment dollars. Before you contact a VC firm, find one that matches at least one of these criteria for your small business.

  • Regional – Some VC firms invest locally in a specific region. The most popular are the Silicon Valley, New York, and the Southeast regions. However, if you are not in one of these, do not fret. There are still VC firms that prefer to invest in your area. Do your research and find them.

  • Industry – What industry do you serve? Retail? Health care? Software? VC firms usually like to keep their investments within a specific industry with which they have experience.

  • Stage of Business – Is your business just getting off the ground? Or are you a profitable and growing business for years? You can find VC firms that specialize in your specific growth stage.

Solidify Business Plan and Financials

If you expect to be taken seriously by VC firms, you must have a polished business plan and all your financial records prepared. Work your business plan to include a brief company history, goals, market research and potential, and your past and projected financial numbers.

Be sure to highlight your management team with their experience and specialty. Previous work with growing companies funded by venture capital is always a plus. Essentially, you want to send a VC firm a packet that is too good to pass.

Be Prepared to Pitch

Meeting with a VC firm is your foot in the door. Don’t let the door slam because you were unprepared. Be sure to prepare a brief presentation, 15-30 minutes maximum, and consider reading up on the presentation tips given generously by friendly venture capitalist Guy Kawasaki (i.e. think twice about stuffing your PowerPoint with boring data).

Practice your pitch with others. Get feedback, and practice again. e ready to answer some tough questions. You want to be prepared for the unexpected in any VC pitching situation.

Venture capital is a great way for an expanding small business to acquire financial capital. Do your homework, and find the right VC firm for your business. Polish your documents, and practice what you’ll say in a VC meeting. You’ll have an edge over all that fierce competition with these three simple tips.

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