What can I do to make my business attractive to venture capital?

Show them an exceptional management team comprised of those who VCs have funded in the past and have made them millions. Show how your market is going to make your company worth 20x in three years.

Pretty damn near impossible to get VC funding right now. Sadly.

Thanks for your input, Larry. I've been trying to figure out a way to get funding, but like you said, it's damn near impossible right now. I was hoping to separate myself from the masses, but it's harder than it sounds. I'm headed back to the drawing board. Thanks again for your thoughts.

Agree with Larry's points. A great management team and addressing a huge market are the two most important factors.

A few other ideas.

First, bootstrap as long as you can. Even consider angel investors. Taking funding from a VC in a down market will cost you an arm and leg but if you must, you must.

Second, you have a huge advantage over many other start-ups. You already have a product with beta customers that are willing to pay. Use that advantage to the max in your pitch to investors.

Third, it's not just making your company look attractive but it's also how you conduct your search for an investor. Look for VCs that have just raised/closed funds and therefore are more inclined to invest in new projects rather than saving their money for existing portfolios. There aren't many but there are a few. Also, network like crazy. A VC is more likely to look at a deal based on it coming from somebody they know and trust vs. being contacted by you out of the blue.

What do others think?

John

In addition to the insight already provided, here is an article from my blog that is specific to an industry - but you'll get the point I am making and be able to apply it to the marketplace you are building in.

http://www.joeabraham.com/169/answers-to-raising-capital/

Seed funding comes primarily from friends, family, business associates and angel investors who have an affinity for the marketplace the venture is based in.

Joe...

John, I generally agree with the other answers here. However I would like to add what I consider to be a crucial point.

Take the time to create a truly compelling and actionable case for your business before starting the process of locating a funding source. This involves creating a strategic business plan.

Anyone in the funding industry is going to want to see a plan that deals honestly with your product, your target markets, the opportunities you see, the competitive environment within your target markets, competitive threats to your products and company, and an extensive analysis of all the other risks that could derail you.

Funding sources want to know that you are ready to move to the next step and the only way to do that is to do a ruthless assessment of your company and how exactly are you going to implement.

Perhaps in your case you could find a company currently making a complimentary product in the right market space that wants to expand and approach them with your product as a line extension.

You are probably premature for a ventur investment. As an early startup, it will be hard to attract venture capital who will be looking for an investment with a good exit strategy for their recovery.

Angel investments, partners with the correct background and investment potential, etc. are probably in line with what you need today - a stable product, with more customers.

For a good Venture Capital investment, you will need to see a revenue stream, with growth potential.

Also consider a strong board of advisors, who have industry experience, experience raising capital, and experience growing successful companies. Their pedigree will bring the knowledge and potentially the investment interest that you need.

Get involved in the local business community, get advice from business owners that know your unique business climate locally, it will help you find the right resources for growth in this frail economy. Frail is not necessarily bad - as great business potential can be found in an economy like this.

see my dear friend if fund and capital is interrupting your way then why don't you launch shares in the IPO of your stock exchange so that people may take a few and abide with you

for studying this sort of cases try to study the business structure of people like Nandan Nelakani

primarily your product's marketing is an important criteria as it depends how do you promote your product and gain customers trust as the feild of sale works on the convinience of the people need

There are four factors you should focus on to make your business more attractive to venture investors:

1. Total available market - Do the investors believe that you are targeting a big enough market? Most investors think in terms of billions, not millions.

2. Natural leadership - Do you have "natural" leadership ability as the CEO or collectively as the executive team? Investors want the CEO/exec team to be smart, passionate, and normal.

3. Product/service uptake - Is your product or service good enough to sell itself? This is a tough one to gauge in the early days of a company, but you should try to demonstrate that your product will be adopted by the market with minimal sales and marketing efforts (e.g. there is organic demand).

4. Scalability - Can your business scale? If you take care of the previous three points, you should have a business that scales, but you still need to pay attention to building a business/model that scales efficiently (e.g. I've identified my "ideal" salesperson, how to hire them, the economic model that allows these salespeople to get cash flow positive in a reasonable period of time.

Hope this helps - Scott

You seem to be far along the growth path. Based on your needs and expansion plans I would suggest you talk to your beta customers first. They know you and your product best and, if they are in a position to, are the most logical investors. If you don't need money immediately, hold off as long as possible to improve your negotiating posture. I'm a little confused about lauchching a "second version"?, Fron long, hard experience, I suggest you freeze the design and expand the marketing first. Good luck!