Entrepreneurs hoping to obtain venture funding should have a sophisticated understanding of the market, and an effective means to generate capital. While receiving financing has become increasingly difficult, Mark Hanrahan, the Founder of Markmel Co., LLC, located in Urbandale, Iowa, claims that a proper business strategy and marketing campaign, can launch your start-up into long-term financial success. He outlines some of the primary components to obtaining venture capitalist funding.
Have a Sophisticated Understanding of Your Market
Entrepreneurs looking to establish themselves within an industry should first perform extensive market research and analyze consumer trends. According to Mark Hanrahan, most individuals are unable to obtain venture capital funding due to a lack of market knowledge. He recommends taking the time to learn from the successes and failures of other start-up initiatives. At the end of the day, an entrepreneur should be flexible and willing to adapt if necessary.
Uniqueness & Superiority of Your Product or Service
A start-up business should take the time to establish an image and differentiate themselves from the competition. Mark Hanrahan states that a business should create value, as this will generate a substantial client base. Similarly, those looking to obtain venture capitalist funding should have a long-term financial strategy, accurate sales projections, and be aware of all necessary patent/ government regulations before applying for financial assistance.
Have a Solid Management Team in Place
Having a top-notch management team in place is to your benefit regardless of the decision of a venture capital investor; however, it will also help to assure their decision to invest as well. Additionally, your team is a representation of your business’ values, so, it is important that they work and produce optimal results. A potential investor will likely want to visit your company’s workplace and meet your team before choosing to invest.
Understand the Investor’s Philosophy
Each venture capitalist has a philosophy that underlies their approach to investing. Some are strictly seeking financial return, while others are taking strategic approaches to benefit other companies that they own. Understanding their motives can help you comprehend their opinions on various aspects of your business. It is important to ensure that your initiative aligns with a venture capitalist’s long-term investment strategy. Seeking a mentor is often a proactive means to receive helpful advice and can help point individuals in the right direction.
Mark Hanrahan Urges Entrepreneurs to Know their Numbers
Investors want to know that they are making a wise investment decision and will need proof of your company’s success. Have all financial details prepared and be ready to provide past financial data as well as future projections. Mark Hanrahan suggests involving an accountant or an advisor if needed for this stage.
Aspiring entrepreneurs should establish clear goals and highlight long-term objectives. Taking the time to prepare can help individuals obtain the necessary funding required to take their professional endeavors to the next level.