How Should I Approach The Venture Capitalist

Traditionally, the Venture Capital industry has been a closed community with its own grapevine passing on information and gossip to each other. The VCs receives thousands of proposals and the conversion rate could be as low as 1%. So it always helps to go through a business contact (banker, accountant lawyer etc) of the VC or, better still, through the company which the VCs have actively funded. The latter approach does two things – one, it tells you that the entrepreneur who is recommending is happy with the working style of the VC and two, it conveys to the VC that you are one of the serious candidates for investment as you are being referred by somebody who is familiar with their investment focus and strategy.

With the Dot Com boom, however, the traditional rules of the game are changing somewhat. Speed has become in important value in business today, and shorter time to market is giving the businesses greater competitive advantage. Most VCs now are not averse to being contacted directly by email or fax through a "cold call".

However, you have to ensure that you send a well drafted Venture Summary of between  2 to 4 pages at the point of initial contact. The summary should explain the business proposition in precise terms, how much money you need, why do you need the money, and what returns can the VC expect to make by investing in the venture. Also, before making contact, ensure that you have a full business plan ready to be submitted when asked for by the VC. You should also be ready with the presentation which you will make to the VC to sell your business plan to him. Things could move very fast if you are lucky, and you should be ready with all the ammunition at your disposal to win the investment  which your business needs and, perhaps deserves.