Why Do Venture Capital Funds Reject Your Business?
“You think of the venture capital funds and approach them for the working capital. What happens? Unfortunately, in most of the cases such requests are turned down right away.So, where is the fault? The answer is that the fault lies in your approach. ”
You have started your new business and are much worried about raising capital. You think of the venture capital funds and approach them for the working capital. What happens? Unfortunately, in most of the cases such requests are turned down right away.So, where is the fault? The answer is that the fault lies in your approach. First of all, you should try to establish your business and then talk to the venture capital funds for capital.
Now, let us discuss the main reasons as to why these venture capital funds reject your deal. First of all, the reason can be that your company is entirely new and therefore the venture capital funds don’t want to take any risk. If this is the case you should rather apply for grants or aim at those funding agencies that deal especially with the newly opened companies. That would be easier as well as less stressful for you.
Secondly, the capital that you are asking for may be too small as compared to the high standards of these funds. Your capital got to be to the tune of 1-5 million dollars if you want to make any success in this field. Moreover, you should have made some amount of profit before approaching these funds.
It is a matter of common sense that it is extremely difficult to convince someone for capital if your company does not have profit making potential. It’s better if you are able to show 2-3 years of consistent and impressive revenue generation. Don’t concoct everything. The people at these funds are shrewd and can see through any kind of elaborate trick. Small variations however are acceptable and are often overlooked.
Moreover, the project or the idea that you want to convey to the personnel at the venture capital funds should be lucid and practical. Too many high-sounding and intricate ideas often meet rejection at such junctures. You yourself have to take all the pains to promote your business.
Total reliance on advisors cannot bear rich fruit. You have to work sincerely and hard with the venture capital funds and convince them that you would do everything to perk up your business if required. Watch your publicity policy closely and meticulously. A good reputation and popularity often do the needful even if the level of profit is not that high.
Author - DeeKay
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