{"componentChunkName":"component---src-templates-articles-index-jsx","path":"/articles/raise-venture-capital/","result":{"data":{"props":{"adsense":true,"adsenseMobile":false,"byLine":"","canonical":"https://staging.business.com/articles/raise-venture-capital/","content":"\n<p>Venture capital isn't only for high-flying tech startups. It's a viable option for small businesses in every industry. That doesn't mean raising venture capital is easy to accomplish; only a small percentage of startups are successful each year. But if you meet certain criteria, and play your cards right, you may be able to pull it off.</p>\r\n<p> </p>\r\n<p><strong>Editor's note: Looking for the right loan for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.</strong></p>\r\n<p> </p>\r\n<div id=\"bz-form-widget-0\" class=\"bz-form-widget\" data-bz-category-id=\"10128\"> </div>\r\n<h2>Types of venture capital</h2>\r\n<p><a href=\"https://www.businessnewsdaily.com/4252-venture-capital.html\">Venture capitalists</a> invest in companies at different stages of their business cycle. As a result, they look for varying things in the companies they partner with. Understanding where your business falls will help you properly target the right VC for your fundraising efforts.</p>\r\n<p>\"Venture capital is only pertinent for a small segment of the companies in the U.S., so you have to know your audience,\" Tom Walker, president, and CEO of <a href=\"https://www.rev1ventures.com/\" target=\"_blank\" rel=\"noopener\">Rev1 Ventures</a> told business.com. \"A lot depends on what stage you're in.\" <strong></strong></p>\r\n<p>There are four main stages of venture capital. These include seed capital, early-stage capital, expansion capital and late-stage capital.</p>\r\n<ul>\n<li>\n<strong>Seed capital:</strong> Seed stage capital is designed for companies that have a product idea but may not have any paying customers yet. Funding at this stage is typically for product development, to fund setup costs or for market research.<br><br>\n</li>\r\n<li>\n<strong>Early-stage capital:</strong> Early-stage capital is available for companies that have been in business for a few years and are enjoying red-hot growth. Funding at this stage is used to chase growth, enhance existing operations or reduce costs.<br><br>\n</li>\r\n<li>\n<strong>Expansion capital: </strong>Expansion capital is for established, successful companies that want a VC to help them reach the next level. Funding is used to go into new markets or boost marketing to reach more customers.<br><br>\n</li>\r\n<li>\n<strong>Late-stage capital:</strong> Late-stage capital is for companies that are already proven leaders that want to get even bigger. Funding may go to increase capacity, enhance marketing, or increase working capital.</li>\r\n</ul>\n<p>\"When you cut through it, raising venture capital depends on the quality of your idea, the potential future for that idea, and where you are in the phase of development,\" said David Larsen, managing director of alternative asset advisory at <a href=\"https://www.duffandphelps.com/\" target=\"_blank\" rel=\"noopener\">Duff &amp; Phelps</a>.</p>\r\n<p><strong>[Don't think venture capital funding is right for your business? Check out our </strong><a href=\"https://www.business.com/categories/small-business-loans-and-financing-options/\"><strong>review of the best business loans and financing options</strong></a><strong>.]</strong></p>\r\n<h2>Benefits of venture capital funding</h2>\r\n<p>Venture capital has several benefits, which is why so many startups are vying for venture capital dollars.</p>\r\n<ul>\n<li>\n<strong>Access to capital: </strong>The biggest reason small businesses seek venture capital is access to funds without the strings that come with a business loan. When you go the venture capital route, you can raise more money than through a business loan. You also don't have to worry about paying back the capital or contending with interest and fees. But, you do give up minority control of your enterprise. VCs invest money in exchange for a stake in the company. If you don't want to give up any control, venture funding is not for you.<br><br>\n</li>\r\n<li>\n<strong>Business expertise and mentorship:</strong> Venture capitalists tend to invest in companies for the long haul. They aren't looking for a quick exit like their private equity counterpoints; they're willing to stick it out for a big return in the future. They often offer the companies they invest in insight, business expertise, and help running the business. They can guide a startup by hiring the right employees to identify growth opportunities. They can also provide legal and tax help, critical areas for growing enterprises. Some VCs even require a seat on the board in exchange for an investment. <strong>[Read related article: </strong><a href=\"https://www.business.com/articles/private-equity-vs-venture-capital/\"><strong>Private Equity vs. Venture Capital: What's the Difference?</strong></a><strong>]<br><br></strong>\n</li>\r\n<li>\n<strong>Connections and networking:</strong> Venture capitalists tend to specialize in certain industries and as a result, know a lot of the key players. If they invest in your company, they will introduce you to the ones who can benefit your business. The access and connections you make through your VC can be invaluable.<br><br>\n</li>\r\n<li>\n<strong>Decreased risk of failure:</strong> As it stands <a href=\"https://www.sba.gov/sites/default/files/Business-Survival.pdf\" target=\"_blank\" rel=\"noopener\">only half of small businesses</a> make it to the five-year mark. Add a pandemic in the mix, and enterprises are shuttering their businesses at a rapid rate. Venture capital funding doesn't mean your business will be a success – 20% of all <a href=\"https://www.sba.gov/sites/default/files/advocacy/Frequently-Asked-Questions-Small-Business-2018.pdf\" target=\"_blank\" rel=\"noopener\">startups fail in year one</a> – but it does stack the odds in your favor. Venture capital investors have the experience, the business acumen, and the connections to help you succeed.<br><br>\n</li>\r\n<li>\n<strong>Personal collateral not required:</strong> Venture capitalists want a stake in your business; they don't want your home or sports car. Most venture capital funding agreements don't require the founders to provide personal assets as collateral. That's not true of business loans. Lenders expect to be paid back and will require assurances in the form of a <a href=\"https://www.business.com/articles/risks-of-personal-guarantee/\">personal guarantee</a>. That may be your home, car, or other real estate property.</li>\r\n</ul>\n<h2>5 tips to raise venture capital</h2>\r\n<p>Venture capital is attractive, but it is not easy to obtain. That's why <a href=\"https://news.gallup.com/businessjournal/175499/starved-financing-new-businesses-decline.aspx\" target=\"_blank\" rel=\"noopener\">most small businesses</a> use personal savings for their initial startup needs. \"There is money to be had, but it's difficult,\" said Larsen. \"There are more people seeking capital than there is capital available.\"</p>\r\n<p>To increase your odds of getting noticed by VCs, follow these expert tips:</p>\r\n<h3>1. Find out if your business is VC worthy.</h3>\r\n<p>Venture capitalists invest in startups that are disrupting a market and growing rapidly. While VCs traditionally focus on the tech sector, venture capital dollars flow to any industry that is experiencing high growth and is undergoing change, such as healthcare or education. If the business is booming and the future looks bright, VCs will be interested.</p>\r\n<p>Depending on the VC fund, Walker said businesses need to have a growth rate that is three to ten times in five years to get on their radar. Beyond the growth trajectory, your product or idea must solve a problem and the founders have to be passionate about what they're doing. \"For us, it's the people,\" said Alon Goren, founding partner of <a href=\"https://drapergorenholm.com/\" target=\"_blank\" rel=\"noopener\">Draper Goren Holm</a>. \"That the people are persistent, the people can execute and are passionate. That's most important to us.\"</p>\r\n<h3>2. Identify how much money you need.</h3>\r\n<p>Venture investing isn't altruistic. VC investors want to make a return on their investment. The more they invest, the bigger stakes they tend to want.</p>\r\n<p>Before you begin searching for venture funding you must figure out how much money you need and how much control you want to give up. Look at how much you'll need to get to the next stage of your business. It could be the amount required to land your first customers or the cost to enter an adjacent market.</p>\r\n<p>You have to ask yourself \"does this capital take you to the next milestone,\" said Katie Palencsar, venture studio lead at <a href=\"https://www.anthemis.com/\" target=\"_blank\" rel=\"noopener\">Anthemis</a>. \"It shouldn't be looked at as working capital to keep the lights on.\"</p>\r\n<h3>3. Target the right VCs.</h3>\r\n<p>Venture capitalists receive thousands of funding requests a year. Getting in front of one requires work, which is why you want to be targeted in your approach.</p>\r\n<p>If you're looking for seed capital, you wouldn't pitch a late-stage venture fund. If you make a line of apparel you wouldn't try to connect with a blockchain venture capital fund.</p>\r\n<p>\"You need to do your research and understand the companies the venture fund is investing in,\" said Walker. \"If you are a SaaS company and you reach out to a venture fund that only does manufacturing it's a real waste of everybody's time.\"</p>\r\n<h3>4. Get a direct introduction from someone in your network.</h3>\r\n<p>The importance of who you know couldn't be truer when it comes to raising venture funding. Your success depends on your network. \"The No. 1 way to raise venture capital is to get a direct introduction,\" said Goren. \"You have to network like crazy to get it, but it's part of the process.\"</p>\r\n<p><a href=\"https://www.business.com/articles/new-normal-venture-capital-firms/\">Prior to the pandemic</a>, networking would involve attending in-person trade shows, conferences and <a href=\"https://www.business.com/articles/how-to-network-for-business/\">networking</a> events. Now, these events take place online.</p>\r\n<p>\"The pandemic has leveled the playing field and opened up many more opportunities for entrepreneurs and investors,\" said Palencsar. At Anthemis, founders can submit a pitch on the VC's website. Anthemis also hosts virtual events for startups including ones focused on female and LGTBQ entrepreneurs. \"We're seeing lots of virtual events, mentorships, and weekly pitch sessions. One of the biggest sources of finding investors is talking with other founders,\" said Palencsar.</p>\r\n<p>Outside of tapping VC community resources, Goren said entrepreneurs have to get creative. \"You can engage on Twitter and <a href=\"https://www.business.com/articles/linkedin-networking-tips/\">LinkedIn</a> and submit details about your company on their websites,\" said Goren, noting that asking people in your network if they know a particular VC can elicit an introduction. \"The No. 1 rule is to ask for advice if you are looking for money and ask for money if you are looking for advice.\"</p>\r\n<h3>5. Be persistent.</h3>\r\n<p>Depending on your business's stage, you may have to come armed to your venture capital meeting with a well-thought-out business plan or just an idea. Seed VCs know the business idea will undergo several iterations, so they are more focused on the founders and how disruptive the product or service is. If you are looking for expansion capital, you'll have to show proof of your business success now and into the future.</p>\r\n<p>Either way, VC experts say it's important to be persistent but avoid stalking. \"If I missed something today follow up a week from now. Things may have changed,\" said Goren. \"Persistence is really important. When you are the CEO of a company you have to be the No. 1 salesperson.\"</p>\r\n<h2>Venture Capital FAQs</h2>\r\n<h3>How long does it take to raise venture capital?</h3>\r\n<p>Raising venture capital is a process. It takes much longer than applying and being approved for a loan. Founders first have to find the VCs they want to target and then they have to spend the time to build a relationship.</p>\r\n<p>After that, it's time to present the business idea and sell it to the VC investors. \"There's an expectation that companies raise $5 to $10 million in a handful of days,\" said Walker. \"For the majority of entrepreneurs, it takes about a year to raise the capital needed.\" Walker said startups have to prepare to bootstrap their enterprises for some time.</p>\r\n<h3>Is venture capital debt or equity?</h3>\r\n<p>Venture capital is not debt, it is equity a company raises in exchange for a stake in the company. Venture capitalists don't want a majority stake, but they do want a minority interest. You don't have to pay the venture capital back, nor do you have to pay interest on the capital, but you may have to give the VC investor a seat on your company's board.</p>\r\n<h3>How many investors should you talk to in a VC fundraise?</h3>\r\n<p>Quality trumps quantity when it comes to raising venture capital. You want as much money as possible, but you don't want to give up too much equity or end up with an investor who doesn't know your industry. There is no rule of thumb, but you should cast a wide net, granted you are targeting VCs that focus on your industry.</p>\r\n<h3>What documents are needed for venture capital?</h3>\r\n<p>VCs are taking a bet on you and your company when they invest. Before they send money your way, they require some documentation to ensure it's a sound investment. Some of that includes an introduction summary explaining your business and why it's different than rivals. Think of it as your elevator pitch but on paper.</p>\r\n<p>You also need to be able to explain the problem you're solving and detail how your approach is unique in the market. You should be able to explain who the competitors are and projections for your future growth. Your documentation should include the management team and their bios, what you plan to use the funding for, and operational milestones you plan to achieve.</p>\r\n<p>Once you get to the due diligence process with the VCs, they will require more financial documents.</p>\n","docType":"article","guid":"articles_5efc9d99ce5217ea2de1d957cad3a167","lastModified":"2020-11-04T15:00:00.000Z","published":"2020-11-04T15:00:00.000Z","structuredData":null,"subtitle":"Venture capital is a viable way to fund a startup, but not every business will be successful. Here's what you need to know about this type of funding.","template":"long_form","title":"How to Raise Venture Capital","type":"article","author":{"avatar":null,"bio":"A lifetime New Yorker, I am a veteran finance and business journalist that has contributed to several national media outlets including Forbes, Investopedia, and Bankrate.com. I have spent my career providing consumers and business owners with advice and guidance to help them navigate the world of finance. As a senior finance writer, I report on all aspects of finance from managing cash flow to choosing the best accounting software.","name":"Donna Fuscaldo","image":null,"slug":null,"social":{"facebook":"","linkedin":"https://www.linkedin.com/in/donna-fuscaldo-52b80645/","twitter":"https://twitter.com/donnabail","website":""},"status":"enabled","title":null,"type":"Staff","user":null},"breadcrumbs":null,"channels":{"primary":{"name":"Finance","slug":"finance"},"sub":{"name":"Funding","slug":"funding"}},"meta":{"robots":"index, follow","description":"If you're struggling to raise venture capital, check out these tips to help secure funding.","title":"How to Get VCs to Invest in Your Business - business.com"},"parsedContent":{"json":[{"component":"p","children":["Venture capital isn't only for high-flying tech startups. It's a viable option for small businesses in every industry. That doesn't mean raising venture capital is easy to accomplish; only a small percentage of startups are successful each year. But if you meet certain criteria, and play your cards right, you may be able to pull it off."]},{"component":"p","children":[" "]},{"component":"p","children":[{"component":"strong","children":["Editor's note: Looking for the right loan for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs."]}]},{"component":"p","children":[" "]},{"component":"RfqWidget","props":{"className":"bz-form-widget","id":"bz-form-widget-0","widgetCategoryId":"10128"},"children":[" "]},{"component":"h2","props":{"id":"types-of-venture-capital"},"children":["Types of venture capital"]},{"component":"p","children":[{"component":"a","props":{"href":"https://www.businessnewsdaily.com/4252-venture-capital.html"},"children":["Venture capitalists"]}," invest in companies at different stages of their business cycle. As a result, they look for varying things in the companies they partner with. Understanding where your business falls will help you properly target the right VC for your fundraising efforts."]},{"component":"p","children":["\"Venture capital is only pertinent for a small segment of the companies in the U.S., so you have to know your audience,\" Tom Walker, president, and CEO of ",{"component":"a","props":{"href":"https://www.rev1ventures.com/","target":"_blank","rel":"noopener"},"children":["Rev1 Ventures"]}," told business.com. \"A lot depends on what stage you're in.\" ",{"component":"strong"}]},{"component":"p","children":["There are four main stages of venture capital. These include seed capital, early-stage capital, expansion capital and late-stage capital."]},{"component":"ul","children":[{"component":"li","children":[{"component":"strong","children":["Seed capital:"]}," Seed stage capital is designed for companies that have a product idea but may not have any paying customers yet. Funding at this stage is typically for product development, to fund setup costs or for market research.",{"component":"br"},{"component":"br"}]},{"component":"li","children":[{"component":"strong","children":["Early-stage capital:"]}," Early-stage capital is available for companies that have been in business for a few years and are enjoying red-hot growth. Funding at this stage is used to chase growth, enhance existing operations or reduce costs.",{"component":"br"},{"component":"br"}]},{"component":"li","children":[{"component":"strong","children":["Expansion capital: "]},"Expansion capital is for established, successful companies that want a VC to help them reach the next level. Funding is used to go into new markets or boost marketing to reach more customers.",{"component":"br"},{"component":"br"}]},{"component":"li","children":[{"component":"strong","children":["Late-stage capital:"]}," Late-stage capital is for companies that are already proven leaders that want to get even bigger. Funding may go to increase capacity, enhance marketing, or increase working capital."]}]},{"component":"p","children":["\"When you cut through it, raising venture capital depends on the quality of your idea, the potential future for that idea, and where you are in the phase of development,\" said David Larsen, managing director of alternative asset advisory at ",{"component":"a","props":{"href":"https://www.duffandphelps.com/","target":"_blank","rel":"noopener"},"children":["Duff & Phelps"]},"."]},{"component":"p","children":[{"component":"strong","children":["[Don't think venture capital funding is right for your business? Check out our "]},{"component":"Link","props":{"href":"https://www.business.com/categories/small-business-loans-and-financing-options/"},"children":[{"component":"strong","children":["review of the best business loans and financing options"]}]},{"component":"strong","children":[".]"]}]},{"component":"h2","props":{"id":"benefits-of-venture-capital-funding"},"children":["Benefits of venture capital funding"]},{"component":"p","children":["Venture capital has several benefits, which is why so many startups are vying for venture capital dollars."]},{"component":"ul","children":[{"component":"li","children":[{"component":"strong","children":["Access to capital: "]},"The biggest reason small businesses seek venture capital is access to funds without the strings that come with a business loan. When you go the venture capital route, you can raise more money than through a business loan. You also don't have to worry about paying back the capital or contending with interest and fees. But, you do give up minority control of your enterprise. VCs invest money in exchange for a stake in the company. If you don't want to give up any control, venture funding is not for you.",{"component":"br"},{"component":"br"}]},{"component":"li","children":[{"component":"strong","children":["Business expertise and mentorship:"]}," Venture capitalists tend to invest in companies for the long haul. They aren't looking for a quick exit like their private equity counterpoints; they're willing to stick it out for a big return in the future. They often offer the companies they invest in insight, business expertise, and help running the business. They can guide a startup by hiring the right employees to identify growth opportunities. They can also provide legal and tax help, critical areas for growing enterprises. Some VCs even require a seat on the board in exchange for an investment. ",{"component":"strong","children":["[Read related article: "]},{"component":"Link","props":{"href":"https://www.business.com/articles/private-equity-vs-venture-capital/"},"children":[{"component":"strong","children":["Private Equity vs. Venture Capital: What's the Difference?"]}]},{"component":"strong","children":["]",{"component":"br"},{"component":"br"}]}]},{"component":"li","children":[{"component":"strong","children":["Connections and networking:"]}," Venture capitalists tend to specialize in certain industries and as a result, know a lot of the key players. If they invest in your company, they will introduce you to the ones who can benefit your business. The access and connections you make through your VC can be invaluable.",{"component":"br"},{"component":"br"}]},{"component":"li","children":[{"component":"strong","children":["Decreased risk of failure:"]}," As it stands ",{"component":"a","props":{"href":"https://www.sba.gov/sites/default/files/Business-Survival.pdf","target":"_blank","rel":"noopener"},"children":["only half of small businesses"]}," make it to the five-year mark. Add a pandemic in the mix, and enterprises are shuttering their businesses at a rapid rate. Venture capital funding doesn't mean your business will be a success – 20% of all ",{"component":"a","props":{"href":"https://www.sba.gov/sites/default/files/advocacy/Frequently-Asked-Questions-Small-Business-2018.pdf","target":"_blank","rel":"noopener"},"children":["startups fail in year one"]}," – but it does stack the odds in your favor. Venture capital investors have the experience, the business acumen, and the connections to help you succeed.",{"component":"br"},{"component":"br"}]},{"component":"li","children":[{"component":"strong","children":["Personal collateral not required:"]}," Venture capitalists want a stake in your business; they don't want your home or sports car. Most venture capital funding agreements don't require the founders to provide personal assets as collateral. That's not true of business loans. Lenders expect to be paid back and will require assurances in the form of a ",{"component":"Link","props":{"href":"https://www.business.com/articles/risks-of-personal-guarantee/"},"children":["personal guarantee"]},". That may be your home, car, or other real estate property."]}]},{"component":"h2","props":{"id":"5-tips-to-raise-venture-capital"},"children":["5 tips to raise venture capital"]},{"component":"p","children":["Venture capital is attractive, but it is not easy to obtain. That's why ",{"component":"a","props":{"href":"https://news.gallup.com/businessjournal/175499/starved-financing-new-businesses-decline.aspx","target":"_blank","rel":"noopener"},"children":["most small businesses"]}," use personal savings for their initial startup needs. \"There is money to be had, but it's difficult,\" said Larsen. \"There are more people seeking capital than there is capital available.\""]},{"component":"p","children":["To increase your odds of getting noticed by VCs, follow these expert tips:"]},{"component":"h3","children":["1. Find out if your business is VC worthy."]},{"component":"p","children":["Venture capitalists invest in startups that are disrupting a market and growing rapidly. While VCs traditionally focus on the tech sector, venture capital dollars flow to any industry that is experiencing high growth and is undergoing change, such as healthcare or education. If the business is booming and the future looks bright, VCs will be interested."]},{"component":"p","children":["Depending on the VC fund, Walker said businesses need to have a growth rate that is three to ten times in five years to get on their radar. Beyond the growth trajectory, your product or idea must solve a problem and the founders have to be passionate about what they're doing. \"For us, it's the people,\" said Alon Goren, founding partner of ",{"component":"a","props":{"href":"https://drapergorenholm.com/","target":"_blank","rel":"noopener"},"children":["Draper Goren Holm"]},". \"That the people are persistent, the people can execute and are passionate. That's most important to us.\""]},{"component":"h3","children":["2. Identify how much money you need."]},{"component":"p","children":["Venture investing isn't altruistic. VC investors want to make a return on their investment. The more they invest, the bigger stakes they tend to want."]},{"component":"p","children":["Before you begin searching for venture funding you must figure out how much money you need and how much control you want to give up. Look at how much you'll need to get to the next stage of your business. It could be the amount required to land your first customers or the cost to enter an adjacent market."]},{"component":"p","children":["You have to ask yourself \"does this capital take you to the next milestone,\" said Katie Palencsar, venture studio lead at ",{"component":"a","props":{"href":"https://www.anthemis.com/","target":"_blank","rel":"noopener"},"children":["Anthemis"]},". \"It shouldn't be looked at as working capital to keep the lights on.\""]},{"component":"h3","children":["3. Target the right VCs."]},{"component":"p","children":["Venture capitalists receive thousands of funding requests a year. Getting in front of one requires work, which is why you want to be targeted in your approach."]},{"component":"p","children":["If you're looking for seed capital, you wouldn't pitch a late-stage venture fund. If you make a line of apparel you wouldn't try to connect with a blockchain venture capital fund."]},{"component":"p","children":["\"You need to do your research and understand the companies the venture fund is investing in,\" said Walker. \"If you are a SaaS company and you reach out to a venture fund that only does manufacturing it's a real waste of everybody's time.\""]},{"component":"h3","children":["4. Get a direct introduction from someone in your network."]},{"component":"p","children":["The importance of who you know couldn't be truer when it comes to raising venture funding. Your success depends on your network. \"The No. 1 way to raise venture capital is to get a direct introduction,\" said Goren. \"You have to network like crazy to get it, but it's part of the process.\""]},{"component":"p","children":[{"component":"Link","props":{"href":"https://www.business.com/articles/new-normal-venture-capital-firms/"},"children":["Prior to the pandemic"]},", networking would involve attending in-person trade shows, conferences and ",{"component":"Link","props":{"href":"https://www.business.com/articles/how-to-network-for-business/"},"children":["networking"]}," events. Now, these events take place online."]},{"component":"p","children":["\"The pandemic has leveled the playing field and opened up many more opportunities for entrepreneurs and investors,\" said Palencsar. At Anthemis, founders can submit a pitch on the VC's website. Anthemis also hosts virtual events for startups including ones focused on female and LGTBQ entrepreneurs. \"We're seeing lots of virtual events, mentorships, and weekly pitch sessions. One of the biggest sources of finding investors is talking with other founders,\" said Palencsar."]},{"component":"p","children":["Outside of tapping VC community resources, Goren said entrepreneurs have to get creative. \"You can engage on Twitter and ",{"component":"Link","props":{"href":"https://www.business.com/articles/linkedin-networking-tips/"},"children":["LinkedIn"]}," and submit details about your company on their websites,\" said Goren, noting that asking people in your network if they know a particular VC can elicit an introduction. \"The No. 1 rule is to ask for advice if you are looking for money and ask for money if you are looking for advice.\""]},{"component":"h3","children":["5. Be persistent."]},{"component":"p","children":["Depending on your business's stage, you may have to come armed to your venture capital meeting with a well-thought-out business plan or just an idea. Seed VCs know the business idea will undergo several iterations, so they are more focused on the founders and how disruptive the product or service is. If you are looking for expansion capital, you'll have to show proof of your business success now and into the future."]},{"component":"p","children":["Either way, VC experts say it's important to be persistent but avoid stalking. \"If I missed something today follow up a week from now. Things may have changed,\" said Goren. \"Persistence is really important. When you are the CEO of a company you have to be the No. 1 salesperson.\""]},{"component":"h2","props":{"id":"venture-capital-faqs"},"children":["Venture Capital FAQs"]},{"component":"h3","children":["How long does it take to raise venture capital?"]},{"component":"p","children":["Raising venture capital is a process. It takes much longer than applying and being approved for a loan. Founders first have to find the VCs they want to target and then they have to spend the time to build a relationship."]},{"component":"p","children":["After that, it's time to present the business idea and sell it to the VC investors. \"There's an expectation that companies raise $5 to $10 million in a handful of days,\" said Walker. \"For the majority of entrepreneurs, it takes about a year to raise the capital needed.\" Walker said startups have to prepare to bootstrap their enterprises for some time."]},{"component":"h3","children":["Is venture capital debt or equity?"]},{"component":"p","children":["Venture capital is not debt, it is equity a company raises in exchange for a stake in the company. Venture capitalists don't want a majority stake, but they do want a minority interest. You don't have to pay the venture capital back, nor do you have to pay interest on the capital, but you may have to give the VC investor a seat on your company's board."]},{"component":"h3","children":["How many investors should you talk to in a VC fundraise?"]},{"component":"p","children":["Quality trumps quantity when it comes to raising venture capital. You want as much money as possible, but you don't want to give up too much equity or end up with an investor who doesn't know your industry. There is no rule of thumb, but you should cast a wide net, granted you are targeting VCs that focus on your industry."]},{"component":"h3","children":["What documents are needed for venture capital?"]},{"component":"p","children":["VCs are taking a bet on you and your company when they invest. Before they send money your way, they require some documentation to ensure it's a sound investment. Some of that includes an introduction summary explaining your business and why it's different than rivals. Think of it as your elevator pitch but on paper."]},{"component":"p","children":["You also need to be able to explain the problem you're solving and detail how your approach is unique in the market. You should be able to explain who the competitors are and projections for your future growth. Your documentation should include the management team and their bios, what you plan to use the funding for, and operational milestones you plan to achieve."]},{"component":"p","children":["Once you get to the due diligence process with the VCs, they will require more financial documents."]}]},"resource":null,"sponsorship":{"sponsorType":"no-sponsor","name":null,"thumbnail":null,"bio":null,"slug":null,"status":null,"social":{"website":null,"linkedin":null,"twitter":null,"facebook":null}},"thumbnail":{"path":"https://staging.business.com/images/content/5f9/c16799c658ab8018b4567/1500-0-","caption":"Ridofranz / Getty Image","isBlurred":false},"bestPicks":null},"related":{"relatedArticles":[{"title":"SBA Loan Default: A Complete Guide for 2020 and Beyond","canonical":"https://staging.business.com/articles/sba-loan-default-guide/","slug":"sba-loan-default-guide","thumbnail":"https://staging.business.com/images/content/5dc/047af7b437483068b4572/1500-0-","dek":"Here's comprehensive guide to all your questions about SBA loan default, forgiveness and the SBA Offer In Compromise.","lastModified":"2021-08-06T20:42:00Z","published":"2019-11-04T15:00:00Z","sponsored":false},{"title":"How to Know an Investor Is Offering You a Good Deal","canonical":"https://www.business.com/articles/what-is-a-good-investment-deal/","slug":"what-is-a-good-investment-deal","thumbnail":"https://www.business.com/images/content/5e2/8a9419c658ab70c8b4570/1500-0-","dek":"Finding a business investor is tough. 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