In recent years, venture capital funding has become a popular source of money for early-stage as well as growing startups in India. What makes the deal even more impressive is the guidance, expertise, support, and mentorship that VC firms provide to nurture startups.
If you have a startup idea with excellent potential for growth, VC firms can provide you with everything you need to grow, scale-up, and expand your business beyond your imagination. It’s no surprise that Venture Capital is one of the most reliable ways to fund your startup in India.
However, raising funds from VC firms is not a piece of cake. No doubt, VC firms provide all the resources that budding entrepreneurs need to turn their ideas into reality; Venture capitalists look for some huge returns on the investment.
Learn more about newly launched VC funds in India.
Therefore, it makes good sense to have proper knowledge about raising venture capital before approaching any of the currently active VC firms in India.
How To Get Funding From Venture Capital Firms In India?
1. How Venture Capital Firms in India Operate
It’s common knowledge that the Indian startup ecosystem is thriving at the moment. Cash-rich individual investors, pensioners’ funds, and big companies are not oblivious to this fact. They want to cash on this opportunity and enjoy huge returns with other people’s ideas.
Forming venture capital is a great way to achieve this. A venture capital firm manages and invests this money, on behalf of these wealthy investors, in promising startups.
Startup entrepreneurs use this capital to grow and scale up their business. Besides money, VC firms provide all the necessary guidance to startups so that they can start achieving profits as soon as possible. They also advise them on mergers, acquisitions, and IPO, etc. VC firms payback returns to their investors, and the rest of the profits are claimed by the venture capitalists.
2. Know the Right People at the VC firms
VC firms usually have four levels of professionals- Limited Partners (LP), General Partners (GP), Associates, and Analysts. Limited partners make the actual investments with their own money while General Partners manages this money and choose startups for investment.
The associates are the face of Venture Capital firms. They are the ones who make or break deals with the startup founders. Then comes the Analysts. As the name suggests, analysts analyze and observe the market, take note of new visionary entrepreneurs and startups to find promising companies that have good potential for growth and returns.
3. Selecting the Best Firm for Your Funding Needs
The right VC firm can make a world of difference for your startup. To achieve this, you need to study the market a bit. Shortlist the VC firms that have a good reputation in your industry, and that can provide you with the best mentorship.
For instance, if you’re a tech startup, your chosen VC Firm should be aware of all the innovations, trends, and the latest technologies in your industry. Only a knowledgeable and up-to-date VC firm can provide you with the right guidance to reach your business goals.
It would help if you always remember that VC firms usually have the last word when it comes to utilizing the VC fund. So, they need to have a clear understanding of your startup and industry.
4. Have a Clear Knowledge about Your Strategies and Business Goals
To convince the VC firms to invest in your startup, make sure that you have a good understanding of the growth potential of your business, have clear-cut strategies about the growth, and achieving your goals.
Create an impressive business presentation to pitch your idea to the investors. Support it by factual data to make your case as appealing as possible.
5. Approach the Investors
Now that you have your pitch ready, it’s time to approach the right people at the VC firm. Here, your goal should be to get to meet the GPs. For this, you’ll need to contact and persuade associates and analysts.
Once the GP agrees to meet you and listen to your idea, it’s your opportunity to convince them about your startup idea with a clear business plan and a well-made presentation. These steps will help you ultimately close the deal and get the required capital for your startup.