Entreprnenören Karolina Malmlöv presenterar sin affärsidé framför en jury.

5 Tips for Those Seeking Venture Capital

If you’re unsure about how to successfully attract investors and secure venture capital for your company, here are our top pieces of advice!

1. Be Prepared

Seeking capital from private investors requires careful preparation. You should have a clear understanding of what you’re seeking and what unfolds from the moment you decide to collaborate. You need to articulate your business plan and vision for the future clearly.

2. Stay Focused!

Focus on explaining the concept during the meeting – namely, the problem your company solves and for whom. An investor often wants to see a clear logic in the problem your idea addresses and how you create value for the intended customer. Therefore, you need to articulate your solution in an easily understandable way, even if it is multi-faceted and can evolve in several directions. Many investors are simply looking for ideas they can easily grasp and understand.

Who makes up the team that will lead the company, and why are these the right individuals for the job?

Describe the market, its segments, the company’s target audiences, and the reasons behind targeting those specific groups.

Share information about your competitors and how your company distinguishes itself from them.

Illustrate how the company will generate revenue and provide an overview of the financial projections.

Are there any intellectual property rights, such as patents, in place?

3. Showcase the Returns for Potential Investors

Keep in mind that you’re addressing an investor who aims to yield a return on their investment in your company during your presentation. Ensure you fully grasp the company’s financial path, including future capital needs and how you intend to use that capital. Simply put, demonstrate how the company’s profitability is expected to unfold.

4. A Good Presentation Leads to More Meetings

If the initial meeting sparks the investor’s interest, they will seek more information, delve into the company, its market, and get to know the team driving the business. Securing venture capital is not a task accomplished within a week. Typically, the process takes 3-9 months from initial contact to the completion of the investment, so it’s crucial to plan ahead.

5. A "No" Means "Keep Going"

Many companies receive a rejection after the initial meeting. This doesn’t necessarily mean your business idea is flawed but rather that the idea may not align with the investor at the moment. It could be due to a lack of industry expertise to work with your company or the recognition of alternative funding sources, such as Almi or a bank, that could better address your capital needs.

Another reason for investor rejection could be that your business hasn’t progressed far enough, and they want to see additional evidence that the market is positively responding to your product/service. Investment firms typically enter the scene after the startup phase, expecting some level of revenue in the company.

Venture Capital – a Challenging Process

It’s essential to be aware that securing external capital is a challenging process. Of the companies we encounter through our investment fund, Spectria Invest, only 5-10% successfully navigate the entire process and secure their investment. The advice for those facing rejection, whether from us or another source, is to embrace the feedback and move on to other investors. Seek individuals with a background in your industry or who invest in similar ventures and persist in presenting your idea until you succeed.