Coming up I’ve got my friend Mariah Lichtenstern who runs her own venture capital firm to tell you what you should do before you reach out to a VC and when is it the right time to actually do so.
What Founders Should Consider Before Going to a VC
A number of founders think that they need to raise money before going to a VC (venture capitalist), but in reality, you don’t. In fact, that should be the last consideration when building your business.
The number one thing you need to consider before going to a VC is determining your client. You have to know what your customer wants and know customer service so you have to really look at your economics, your stage, and your market to see if you are investment-worthy.
Find some way to bootstrap and validate your market because what investors want is traction. They want to know that you have identified the channel where, if they pour their money on those channels, they can predict the return.
How to Determine if You Are Ready to Approach a VC
You can actually approach a VC even if you are still in the idea stage. Mariah is willing to help you out, so don’t be shy.
If your idea is not ready for institutional investment, an advisory role might make sense to you. Venture capitalists will help you understand how to proceed from your idea to realize it. They might not invest in your idea right away, but in due time if you prove yourself worthy, they will eventually invest in you.
It’s important that you develop a relationship with them so they will see your integrity. The way you respond to your sell rejection is important to them because it will help them decide if they want to spend 5 or 10 years in your business once they are ready to partner with you.
Investing is like a marriage, you would only want to work with someone whom you trust.
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