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Obtaining VC funding could be daunting if you don’t have a solid understanding, particularly when investors have become very selective with tons of startups knocking on their doors because of the pandemic. Here are the tips from Mr. Tony Tung, Vice President of Gobi Partners China, to help you to get prepared for fundraising.
 
Whom should I approach first? Venture Capitalist or Angel Investor?
As two of the most common sources to seek funding opportunities, you will need to know the tell the difference between venture capitalists and angel investors before deciding which to pursue. Depending on what stage your business is in, you can seek funding from one or the other.
 
Venture Capitalist tend to invest in businesses that are already established, so if you are very comfortable with what you are doing and pretty clear how your business will develop in the coming 3-5 years, then it’s good timing to find venture capitalists. As they have a very high requirement in scalability and momentum of the company they are investing in, you will have more chances to get funded from Venture Capitalist if you are up for it.

Angel Investor, on the other hand, is more likely to invest in businesses that are at the very early stage. They choose businesses that they are interested in and can see becoming profitable, even if the company has not proven itself yet. In a nutshell, they invest because they believe in you.

Can I approach more than one Venture Capitalist?
Venture Capital (VC) firms comprise a group of professional investors. Their capital comes from individuals, corporations, pension funds and foundations. This means they would share the risks. These investors possess different networks, resources and specialize in different expertise. It is a ‘united force’ that would help your company grow as they are armed with more record references, operations data and financial metrics to validate your valuations.
 
There are no rules that you have to choose just one VC firm. To increase the investment opportunities, you might tap on multiple VC firms. It is purely “a judgement call of the entrepreneurs that are actually raising funds from.” says Tony.
 
5 Basic requirements before meeting venture capitalist
 
Before you pitch to venture capitalists, you have to ensure the following boxes are ticked in order to make a strong impression.
 
Timing: Are you ready yet? If your business has entered from ideation to initial market stage, with a prototype, demo, or even undergoing final testing, it would be the perfect time to research the venture capitalists that are most aligned with your business.
 
Uniqueness: Do you have a unique selling point that makes you stand-out from competitions?
You need to be very confident about your uniqueness from a global perspective, before making your first move.
 
Vision: It is essential that you have a clear vision of how your company will scale in 3-5 years down the line, and communicate that clearly to your potential investors. You have to show investors where the blue ocean is amidst a sea of red, that you have found the entry point others haven’t discovered.
 
Planning: A detailed and thoughtful plan to demonstrate your ability to execute your idea. What gains traction? Investors are interested in knowing more about how a founder intends to use the capital and what his success metrics are along the way. Founders should be able to articulate the progress they’re aiming to make in different areas.

Knowledge of the market: Knowledge is power. You need to know the market size of your business, whether it is big enough to provide sufficient opportunities for your company to grow, and fulfills investors’ appetite in scalability. Highlight your potential growth with market metrics.
 
Turning your dreams into reality
Once you’ve determined that a pitch for venture capital funding is the way to go for you
and your business, these basic tips will help you get in front of your business trajectory. Get well prepared with the above tips and start your fundraising journey now. Remember to design a compelling pitch deck. Your effort will pave the way to success. Good luck!
 
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