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Raising Venture Capital Remotely; What To Do and What To Remember

Venture North Group > entrepreneurs > Raising Venture Capital Remotely; What To Do and What To Remember
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As COVID-19 spreads from country to country throughout the world, the “normal” way of doing business for virtually all organizations has changed. Regardless of your form of business venture, face to face business has taken a back seat to curbside delivery, online ordering, and internet-based customer procurement. The same goes for the process of securing funding. Most, if not all banks, are not taking meetings with potential customers, and companies who assist with the obtaining of startup capital, such as The Venture North Group, have turned to online platforms such as Zoom and Skype to conduct their business. Securing and raising venture capital is not easy under even the best of circumstances, so the idea of raising this precious capital remotely can be daunting for startups.


According to data provided by the Pitchbook-NVCA Venture Monitor report, the activity for venture capital fundraising was quite strong during the first quarter of 2020. There were approximately three thousand deals that raised over $34 billion. This was an increase from twenty-eight hundred deals raising about $31 billion for the last quarter of 2019.

Sadly, this upward momentum was not meant to last beyond the end of the first quarter. With the arrival of the COVID-19 pandemic, the data regarding venture capital fundraising dollars will likely look much worse in the second quarter and maybe beyond. Part of this will be due to the challenges in getting more clarity in some of the highest producing markets, such as travel and transportation. In addition to these questions are also the logistics that surround keeping business moving in the presence of stay at home orders and mandatory quarantines.

This is undoubtedly a challenging environment, and it will likely remain as such for some time. Experts have estimated this could be how the market operates for several months, if not more than a year. If this is the case, what are some things budding entrepreneurs and fledgling startups can do to help boost their odds of success when it comes to securing funding when remote meetings and distance communication are the new normal?

1) Take Advantage of Video Calling Platforms

Face to face meetings will be impossible for some time to come, but this doesn’t mean you cannot communicate in a personal manner with potential investors. There is a lot to be said for being able to see faces and communicate “in person” when it comes to meetings where you are requesting money from someone or giving money to someone. Be sure to have tested your Zoom, Google Hangouts, or other video calling software before your call beings so that your meeting doesn’t start with a technical failure. Despite the clear and apparent challenges COVID-19 has injected into the business environment, there is still a big opportunity for startups to raise funds. Once you have opened the “virtual” door, you then need to think like an investor will when presented with your business plan.

Also, recognize when you are presenting yourself and your ideas virtually, some of the tangible nature of your presentation is lost to investors. This is something you need to work around to make your presentation as visually appealing and as understandable in a virtual format as it would be in an office conference room. Consider creating a digital demo so investors can feel they are getting the most hands-on experience possible, even when you may be on opposite sides of the country.

Finally, make sure to narrow your list of meeting attendees to those necessary for your needs, at least for the initial meetings. Having too many people online at a virtual meeting can lead to confusion and inhibit your ability to get your message across properly to those who are deciding whether your idea is a worthwhile risk. Save the larger group meetings for an in-person set up at some point down the road.

2) Work Your Network

If you have a prior relationship with or have met with a particular firm before in-person, use this as leverage. If the firm already “knows” you, this will significantly increase your odds of success in today’s unpredictable investing climate. This is certainly not a time when cold calls to random firms are suggested.

Focus on established personal relationships but, don’t be afraid to network if you feel your idea is something truly great. Take the time to build an irrefutable case. Showcase why your idea is “recession-proof” and how it can support key global trends that are important now and post COVID-19. Also, highlight how your idea can do more with less, augment existing technologies to further your goals, and deliver superior return on investment to your investors by appealing to e-commerce and online customer experiences, which are so valuable in this current market.

3) Stick to The Basics

The lack of in-person time and communication means that entrepreneurs need to stick to the basic fundamentals of fundraising more than ever. If your company is looking to begin the process of securing capital amid the COVID-19 pandemic, try to gauge the interest of a potential venture capital firm or individual investor through a dialogue of actions rather than direct talk. If the firm or individual reciprocates those actions from their side, you can have a little more confidence in the ability to build a relationship-even remotely. The need for remote communication also means you need to truly understand the venture capital firm you are working with and keep all levels of the firm in the loop. Most critical decisions are made through a venture capital team as opposed to a singular point person, so it is valuable to be sure everyone is on the same page regardless of whether you are communicating through virtual means or face to face.

Due to the remote nature of communication, there will be a lot more work needed on your part to identify the investors who fit your business profile and needs. Also, due to remote communication, there will be fewer opportunities for you to pitch your idea. Hence, you need to be better prepared than ever before to articulate your business model, market opportunities for your plan, and what the return on investment will look like for potential investors.

4) Be Transparent

Now is not the time to allow your potential investors to fill in the blanks when it comes to missing or fuzzy areas of your business plan. After all, they may make an inaccurate assumption, which leads to the decision to deny potential funding for your business. COVID-19 has made it very difficult to predict outcomes in virtually every industry. However, it is necessary to address any potential risk to the best of your ability. Go as in-depth as you are reasonably able to provide potential investors with the data they are looking for to help them understand their risk.

It is also essential to be clear with your investors about when and how much funding you need. Position your requests around specific milestones for your business. Be sure you have this data collected and ready to share during your presentation. This should include models, supporting schedules (unit economics, margins, etc.). The more detail you can provide will demonstrate vision as well as confidence and provide clarity to your investors.

5) Limit “Blaming” COVID-19

Yes, COVID -19 has put a significant damper on virtually every aspect of business and the economy. However, too many people are using COVID-19 as an excuse for poor practice or limited planning and foresight. Entrepreneurs are still finding ways to secure funding for their startups despite COVID-19 and all of the challenges it has brought to the business climate.
As noted above, fundraising and securing capital for a new venture can be very challenging. It is often difficult to find an investor or venture capital firm that fits the needs and design of your business. This process will indeed be even more challenging in the face of remote fundraising. There are difficulties associated with virtual and online communication and presentations that are not present in a face to face setting.

If you are an entrepreneur in the Anchorage, Alaska area and are in search of startup funding, look to The Venture North Group. Our years of combined expertise in markets of all kinds, both international and domestic, can help your business to secure the funding it needs to get started. Even during challenging times such as these, there are investors out there looking to fund businesses like yours.

Resources
https://nvca.org/research/pitchbook-nvca-venture-monitor/
https://www.forbes.com/sites/tomtaulli/2020/04/17/how-to-raise-venture-capital-remotely/#179ca70a17a8

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