If you look at where entrepreneurs come from then you will find that most wold previously been in permanent employment from where business ideas, business experience and eventually a business plan may come from. Yes of course graduate entrepreneurs are becoming more commonly found today with entrepreneurship as an career becoming more and more popular and business finance becoming more readily available.
As with many things that are worthwhile doing, the field of entrepreneurship is not smooth sailing.
You have to come up with a feasible business plan before embarking on looking for funding from to enable you convert the idea into action.
Having drawn your business plan, you should shortlist investors to approach for funding since getting access to a bank loan for your start-up may not be easy
This is advisable if you are devoid of savings to pump into the business idea and choose to rely on external sources to roll out the idea.
Selling business idea
But before you start selling your business idea, you need to decide whether you want to work on the notion and grow it into a big business venture or you want to sell the idea to a business entity.
Many prospective businesspeople are often undecided on the two choices and as a result end up losing their dream of entrepreneurship.
Others come up with feasible business plans to sell to potential employers in order to secure employment.
For instance, a young entrepreneur could developed a feasible business plan of an innovative mobile technology and sell the idea to mobile phone company in return for employment or partnership.
Ultimately, this leads to loss of entrepreneurship energy as the idea owner losses control once he is offered employment.
On the other hand, selling a business plan to a rival company in search of funds has left many budding entrepreneurs in regrets as they see their business plans copied without them getting any reward.
If you are convinced that you want to roll out your business plan and grow it into a big business venture, then the venture capital market would be your stop point.
Here, you can shop for investors interested in buying your business idea and grow it.
Owing to the competitive nature of the venture capitalist market, it is essential for an entrepreneur to do proper research and identify the right investor before packaging the business plan for implementation.
Just like doing prior research on a potential employer helps guide a job seeker on where his services could be of value, proper research guides a budding entrepreneur on the choice of the right venture capitalist.
Sending applications arbitrarily in search of funding, without proper research, is a futile effort that can never yield any response let alone results.
This is analogous to a pilot making unsolicited job applications to manufacturing firms that have nothing to do with aviation.
However qualified the pilot could be, his applications can never sell to personnel managers of manufacturing firms.
To identify the right venture capitalist firm, you need to do proper research on the following;
First, research on the venture capitalist’s industry focus in relation to your line of business.
Most venture capitalists tend to focus on specific industries or sectors and exclude others.
Try to enlist only those firms that lay focus on the industry within which your business plan is anchor to stand a chance of being considered.
The second criterion is the geographical preference and proximity to the venture capitalist.
Try to limit yourself to venture capitalists that have preference for funding business plans from your continent, country or even province.
Venture capitalists often earmark their geographical areas of concentration.
If you don’t lie within their area of preference, your application may be in vain.
Third, you need to unravel their stage-of-development bias.
Do they provide seed capital or are they only interested in late-stage investing?
If you are a start-up, its appropriate to single out venture capitalists that provide seed capital.
Fourth, what amount of capital do you need for your business plan and what is the range of capital investment of the venture capitalist?
Most of the investors have set low limits of the size of investments that they can consider sponsoring.
For instance, a firm may state that they only fund business plans that require a capital size of between R1 million to R100 million.
If your project lies outside this range, it is advisable not to approach them.
You must resist any temptation to inflate the amount of capital that you require to match their capital range as you would encounter some difficulty later when you are called upon to demonstrate the feasibility of the project and its revenue potential.
Upon settling on a selected number of targeted venture capitalist firms, try to do a background check on the type of investments that the firm has made.
This can help you identify whether your business plan could be a duplication or slightly similar to an investment the targeted venture capitalist firm has explored.
Once prepared, you can now approach your targeted venture capital firms or go to a investors network event where you can start meeting business angels and venture capital partners.