How to use a venture capital broker to raise funds actually depend on the startup industry, the problem the startup is solving and the market outlook of the industry. All information are base on real time market analysis. There are five stages to encounter when using a broker. The five stages on how to use a VC broker to raise funds are presentation, consultation, negotiation, agreement and execution. Comparatively, these five steps ensures a successful outcome for all the parties involved. It removes one of the pain points for venture capital firms and startup founder too. And align the startup to the need of the VC fund in the market at the right time. On the other hand, it helps the startup to streamline the target VC for the fundraising. It is very interesting to see such an occasion occurring subsequently.
Technological advancement in the area of predictive analysis break even the chances of closing a funding round at the right time. The startup founder has ample time to focus on the mission at hand. Every startup founder need greater focus. And a better way to achieve greater focus is to have a vibrant team. This is work specialization in practice. Studies found out that there is 50% success for startup founders that raise fund on time. When a startup founder, an entrepreneur, a business owner or small and medium size company raise funds for their business operations at the right time – it increases the chances of success by 65%. And mostly importantly, it helps the company to become a market leader. https://www.entrepreneur.com/
At the presentation stage?
The presentation stage is the introduction of the startup founder and the venture broker. In most cases, the formal presentation of information is divided into two broad categories: Presentation Skills and Personal Presentation. The informal presentation are the casual meet up or coffee chat with a new person.
In other words, let me tell you a story about my encounter with Steve in New York. A few years ago, while on a trip, I met a journalist who told me a story about a 12-year-old boy named Roy, who told him a fascinating story. His family raises livestock on the edge of a vast national park, and one of the biggest challenges is protecting the animals from lions especially at night. Roy had noticed that placing lamps in a field didn’t deter lion attacks, but when he walked the field with a torch, the lions stayed away.
Experience
From a young age, he’d been interested in electronics, teaching himself by, for example, taking apart his parents’ radio. He used that experience to devise a system of lights that would turn on and off in sequence, using solar panels, a car battery, and a motorcycle indicator box. And thereby creating a sense of movement that he hoped would scare off the lions. He installed the lights, and the lions stopped attacking. Soon, neighboring towns began installing Roy’s lion lights.
How to use a VC broker to raise funds at the presentation stage requires the startup founder to be organized. The details must be easy to understand. In some cases where the founder does not have the information organized, the VC broker can help you to get it organized. When using a broker, your personal presentation which is a means of communication should be carefully considered. You and the broker can address it to get a point across. This is to target the right fit investors and venture capital firms. Your presentation should encompass other speaking engagements, adapted to various speaking situations, such as talking to a group, addressing a meeting or briefing an investor.
Your presentation skills are the step-by-step preparation processes that are usually carried out between the broker and the startup or company. The step-by-step preparation processes can be a form of discussion to identify the skills needed and also understand all the details about the purpose for the funding request. Finally, the skills will align with the startup mission and vision. Also together with the VC fund. The skills must be effective in delivering the best outcome. It is important that you and the broker have a method and plan in place to ensure the presentation is well organized.
How to use a venture capital broker to raise funds at the consultation stage?
The consultation stage entails diving in into the funding request and other details related to the startup. Consultation step is the process by which startup founder and VC broker discusses the development of the company, policies, practices and issues of mutual concern. It involves seeking acceptable solutions for the fundraising. Through a genuine exchange of views and information, both parties are informed about the need to raise a fund.
It comprises of the actual and extent of consultation form undertaken by the startup. The solutions to raise fund will largely depend on what the proposal entails, its complexity and scaling plans. The funding request of a startup are often described as the document called the Pitch deck. This document is submitted to the venture capital broker to be consulted. The form undertaken by startups therefore needs to be decided on a case-by-case basis. This is based on the nature of the startup.
For example, the details of a deep tech biotech startup is different from the plans of a Fintech startup or an e-commerce marketplace. Startups should be concerned with the consultation points. Such as plan making, consenting, monitoring enforcement and quality analysis (QA) resources , that focus on their industry. Failure to consult can lead to legal disputation and damages.
Startups founders can consult with venture capital brokers to know industrial, investors and government related instruments which govern the investment industry.
How to use a vc broker to raise funds at the negotiation stage?
This stage is the strengthening of the communication channel between the investors and the startup founders or the business owner. This is the stage where the startup and the venture capital broker engage in a back-and-forth communication. It is designed to reach an agreement from all the details, information, resources and interests that are shared and others that are opposed.
The negotiation stage refers to an interpersonal decision-making process during fundraising that is necessary whenever we work with a venture capital broker. It helps startups to achieve their objectives – by reaching a joint decision on the fundraising plan with the venture capital broker.
How to use a venture capital broker to raise funds at the negotiation stage entails the venture capital broker introducing the startup founder to the investor. This is after the startup’s Interests are stated and positioned to suit the investors thesis and their underlying interests.
The negotiation stage allows the venture capital broker and the startup founder to come to a legitimate win-win solution that will leave all parties better off. At the end of the negotiation stage, the startup founder and the venture capital broker will put forth proposals that others will view as legitimate and fair.
The proposal will have all the relationship dynamics embedded into it. For example, future business, investors reputation, and startup position are in balance. They are armed with a better understanding of the building blocks of the negotiations. The startup founder and the venture capital broker are positioned to learn more about how to prepare to create a value bridge with the right fit investors at the right time.
What’s the agreement stage when using a venture broker?
The agreement stage is where the startup founder and the venture capital broker prepare documents that dictate a company’s rights and responsibilities in the fundraising process. At this stage, these agreements outline the operations, ownership stakes, fundraising plan, decision-making details, obligations of each party, set clear expectations. And define when certain actions must take place. In short, this is the stage that protects both parties in the agreement.
The agreement stage gives them a sense of security and peace of mind. But there is much more to agreements than meets the eye. They can be complex, long-term contracts or simple instructions for a startup founder or venture capital broker to follow.
How to use a venture capital broker to raise funds at the agreement stage establishes clear funding operation rules and delineates each partner’s role. And are enacted to resolve disputes, delineate responsibilities, and define how to ensure a successful fundraising round.
Advice
“I highly suggest that the agreement is put in place at the end of the negotiation stage. The biggest reason is that it establishes the rules of engagement between the startup founder and the venture capital broker and lays out a road map on how to deal with the fundraising request” said Christopher Clark PhD Venture Capital Broker, Financial Services, Tier 1 Capital raising Finder, Equity Alternative Investment.
While engagement seldom begins with concerns about a future partnership dispute or how to dissolve the relationship or cancel the fundraising plan – the agreement is essential in situations in which emotions might otherwise take over. A written, legally binding agreement is an enforceable document instead of a spoken agreement. It is between the startup founder and the venture capital broker.
What’s the execution stage when using a venture capital broker?
This is the most important stage, also known as the fundraising execution. This is the stage to ensure it gets done after the goals and a strategic plan are set and formulated.
Fundraising execution is the implementation of a strategic plan in an effort to reach fundraising goals. It comprises the daily structures and systems. Operational guidelines that set the fundraise for success.
Even the best strategic plans can fall flat without the right execution. In fact, poor execution is more common than you may realize. According to research from the Office of Mr. Clark , 48 percent of startups fail to reach at least half of their strategic targets. And just seven percent of startup founders believe their companies are excellent at strategy implementation.
About Christopher Clark, VC Broker
Christopher Clark PhD Venture Capital Broker, Financial Services, Tier 1 Capital raising Finder, Equity Alternative Investment said, “the execution plan must describe the transition of the startup from where it is today to the at-scale company the founder envision in the future. Your plan will be unique to your company and your industry. And with the fundraising plan, the at-scale startup profile and the execution plan, you will have the core building blocks for a successful fundraising for your company”.
Before embarking on strategy execution, the venture capital broker will spend ample time researching and formulating the strategy plan. This is beneficial for the startup because it reduces the amount of time that the startup founder will spend to look for investors. “I prefer to develop data-backed strategies from historical insights, market conditions and competitor activity” said Christopher Clark PhD Venture Capital Broker.https://christopheclark.com/
The broker is to collect and analyze relevant information when formulating the fundraising strategy. This is to ensure that ideas and aims align with the startup fundraising objective data. That could help to decide on a realistic fundraising strategy to execute and address the startup’s fundraising needs. The final stage in a strategy execution system is the VC broker using the strategy plan to raise the funding round for the startup.
