9 tips to secure venture capital for your startup

Surfing the net while working again? Are you bored out of your mind at work? Chances are you are working for a boring company, wasting away the best years of your life and earning a wage that is slightly above poverty line. You’ve probably thought about setting up your own business with friends or have a great idea, but have no money to do anything about it.

Or perhaps, you face a bump in your quest to secure financing for your business. With no track record, it may seem too risky for the typical financial providers to consider giving them a loan. Such businesses may then need to consider alternative resources for its capital financing, such as relatives, friends, angel investors or venture capital.

Businesses with limited operating history, too small to raise capital in the public markets or not sufficiently mature to secure a bank loan will find venture capital funding an appealing option.

Venture capital means that someone is taking a risk by investing money in your business because they think that they can earn a reasonable return for the risk they are being asked to take. It is usually for fast-growing digital companies. Venture capitalists (VCs) usually consider the team, the market opportunity, the product, and then consider these questions: Will a lot of people buy this? Will the team survive? Is there a minimum viable product? If all these are considered and the outcome is positive, the start-up is likely to be successful.

Not only do VC provide them with financing, they also provide them with managerial and technical expertise. This can very well be an added advantage for the businesses as part of their learning and growing process.

How do you get hold of venture capital financing for your business? iMoney Group has gone through a few rounds of fund raising to where we are today. There are more facilities for new entrepreneurs today compared to two years ago, which makes it slightly easier to put their feet into the start-up world.

If you have an idea to monetise, here’s what I’ve learnt in securing venture capital as a start-up in Malaysia. As an entrepreneur seeking venture capital, you are selling your business idea and your ability to execute that idea. Securing the funding you need is a matter of taking specific steps, namely the following:

1. Assemble the perfect team

Given the high degree of uncertainty associated with early-stage investing, having the right team helps in attracting venture capital funding. Whether your team is made up of experienced professionals, or fresh graduates — as long as your team members have complementary skills with a track record of collaborating well, you should have a solid shot at attracting some venture capital funding. The team must have the necessary skills, domain expertise and diversity to evolve just as quickly as the industry does.

I believe this is the most important criterion that investors consider first because a strong team can turn an average idea into a great idea. A strong idea powered by a weak team may not be executed well and this is bad for business. The iMoney’s team is formed by choosing the people who had the relevant experience according to the nature of the business. Having a strong term enabled us to still come up with different ideas, or back-up plans, if one idea did not materialise as planned.

2. Your idea must be the best but not necessarily the first

In order for VCs to justify the large risk they are taking with your company, your business idea must be positioned as a solution to a problem. It’s not about being original in your ideas but about how you plan to execute it successful, when others could not. For example, Google is the most successful search engine today, but it was not the first search engine. The same goes for Facebook – it only existed after the likes of Friendster and My Space.

To make your idea stand out from the existing ones, you need to show you can and will do things differently, and the projected growth for the business.