Is Your Startup Ready To Work With A VC? Key Points To Consider, From Pitch To Due Diligence

go through Murad Salikhov

Modest investment and widespread support from venture capital firms is exactly what a new startup needs to move from the early idea stage to a competitive market player. But accept venture capital funds become more severe. This makes communication with funding increasingly important for startup teams.

To help startups and their founders overcome this challenge, here are some suggestions.

Define your funding needs and timeline

Before seeking funding, ask yourself whether your startup really needs investment now.

If the answer is yes, then you need to find out your main priorities for funding. But that’s not all. Funding stages and appropriate timelines are also important, so break your entrepreneurial journey into series – A, B, C, etc. – and set specific, achievable goals for all of them.

You don’t need to have numerous or complex goals, but the goals you set should clearly reflect your desired growth rate. In my experience, this can be helpful in predicting when your startup will next need funding, allowing you to negotiate with investors in advance and avoid financial pitfalls.

Understand the full value of venture capital support

When dealing with investors, startups need to understand not only the financial resources they need, but also the non-financial resources. This shows that the team has a clear vision for development and helps push negotiations to a deeper level.

In addition to capital, venture capitalists have the knowledge to provide strategic guidance and industry connections to help you find the right product-market fit, hire talent, or prevent excessive spending on marketing. Seeking funding only from investors limits the help you can get.

Prepare for due diligence

In 2024, investors will conduct more strict Due diligence took longer than in previous years. So make sure your business is legal and legal, otherwise it won’t be considered at all.

Establish an appropriate legal structure (such as an LLC or corporation) and maintain up-to-date records. Financial statements, tax filings, contracts with customers, employee records—investors may want to see it all.

And be sure to protect your intellectual property rights through registered trademarks or patents (if any). This goes a long way to show that your startup is credible.

Develop detailed business plans and financial forecasts

A clear business plan can help startups stand out and attract investors. It doesn’t have to be overwhelming: just be precise and focused on your value proposition. What makes your business stand out compared to hundreds of similar businesses?

Avoid unrealistic numbers and explain your calculations. Exaggerated or overly optimistic forecasts can damage your credibility if you fail to achieve these goals in the future. Remember, plans should always be monitored and compared with actual results. It’s also good to outline some scenarios where things could go wrong and how it would affect the expected outcome.

Create a compelling campaign

Your pitch deck is the face of your startup, so craft it carefully.

Cover key points: the problem you want to solve, product-market fit, business model, and more. Keep the narrative data-driven, demonstrate potential return on investment, and highlight why your team is primed for success.

Investors will value your clarity and confidence.

final thoughts

Obtaining funding and building lasting relationships with venture capital firms means being prepared. By presenting a detailed and precise plan, a startup can show that it is ready to make changes and not just chase money.

Murad Salikhov is a serial investor and co-founder Black Forest Capital Funda venture capital fund dedicated to innovative financial technology and creator economy projects. Over the course of his career, he has held multiple C-level positions in the payments industry and successfully led projects including Cathay Group and Credit pilot.

Illustration: Dom Guzman