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Thank you for
considering MVC. Before submitting your business plan, please take
a few moments to learn more about what we do and how we work:
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Read about our investment
focus.
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Visit our partnering
section to find out what we look for in entrepreneurs, and
what we think you should expect from a venture capital firm.
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Check our investment
resources for more information about raising money,
selling your investors, growing your company and building your
board.
If you believe that MVC and your company
might be a good match, send your business plan or executive
summary (as a Microsoft Word or PowerPoint attachment) to submit@millenniumventures.com
Please keep in mind that a concise, focused description is more
likely to grab our attention than a lengthy one.
We will give your plan careful consideration
and get back to you as soon as possible
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Partnering
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In the high-stakes world of technology startups, your
company’s survival can hinge on having the right partnerships at
your disposal — the right strategic counsel, technical expertise
and professional services.
With MVC, you’ll reap the benefits of our partners’ depth
of operational, management and technical experience. We know what
it takes to be successful. We understand the competitive forces,
market trends and regulatory issues that can impact a company's
ability to compete. We work in concert with your management team
to provide individual analysis and guidance to forecast and
resolve business challenges
We also bring you access to other valuable partnerships. Our
established technical group includes thinkers and doers at the
forefront of information technology and healthcare. Through our
extensive industry contacts, we can open doors to help you build a
solid executive team. And our collaboration with other venture
capital and consulting firms helps extend your network by
identifying new market opportunities and strategic partnerships.
Partnerships are the core of MVC’s investment process. You
can count on us to work side-by-side with you from the first day
you receive funding. To challenge your ideas to make them even
better. And to stand by you over the long term, through the ups
and downs of getting your business off the ground and on the fast
track to success.
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| Investment
Resources
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Raising venture capital is a
daunting process. Rarely do we hear successful entrepreneurs tell
us that they were pleasantly surprised or delighted by the process
of making the rounds in Palo Alto or Sand Hill Road. Yet, hundreds
of entrepreneurs successfully navigate the perils of fund raising
each year. MVC reviews thousands of business plans each year,
hears pitches from hundreds of businesses and funds less than one
percent of those companies with whom we meet. In other words, the
odds do not favor the average entrepreneur.
So given these long odds, what can
we observe about the successful entrepreneurs? Well, most
importantly, they know how to sell. And they know how to sell at a
high level and to sophisticated investors. So if we think of fund
raising from the standpoint of a sales process what are the
lessons we can learn?
Qualify
the audience
As with any good sales process, the
best outcomes are derived by being prepared and asking good
qualifying questions. Preparation is straight forward, though
remarkably uncommon. Most VC's have web sites that will help you
identify their investment goals, portfolio of companies,
individual partner backgrounds, stage and focus of investment,
average investment amount and other parameters. There is a wide
variety of variables that may make a particular VC firm
appropriate to your needs. Don't waste time with low probability
prospects.
Work
the leads
In this kind of selling, a lead is
equivalent to an introduction. Venture capitalists are much less
likely to invest in companies that do not come by way of someone
they know. These can be Angel investors, corporate attorneys,
accountants, or friends and family. If you haven't already found a
well-qualified Silicon Valley attorney or accountant, go find one.
Understand which firms cater to the start-up industry and are
therefore tied into professional investors. Direct mail as a form
of lead generation won't work. Neither will telesales. This is a
relationship sell.
Build
your pipeline
While many variables are at play,
it is reasonable to expect that raising a first round of venture
capital investment will take a minimum of three months and as long
as nine months, or more. You can assume that it will require
pitching a minimum of a dozen VC's and probably substantially
more. Approach this in waves, allowing for course correction and
the benefit of a learning curve. Adjust the pitch according to
feedback. Assume a very low closing ratio. Track the investor
(prospect) through the various stages of your sales funnel. Here
are some good milestones that measure increasing commitment by the
investor:
- Introduction
and sending the business plan or executive summary - the first
step.
- First
pitch - if you make it to this point you're doing better than
most.
- Due
diligence - if prospective investors begin to make phone calls
they are now qualified. This is a very good sign. Be sure to
follow-up with your references to see what they were asking
about and their perceived interest level. Were they positive
or looking for reasons to pass? What were the issues raised?
Plan to overcome these objections in future meetings. Second
meeting - the timing for this will depend on the firm and the
particular partner style.
- Full
partner pitch - this means you are now under serious
consideration by the investor. This is the equivalent of the
short list. Qualify the audience by quizzing your sponsor
(partner) as to the particular hot button or issue still
unresolved. Be sure to get feedback as to how the full partner
meeting went.
- Term
sheet - the Promised Land. This may takes days or weeks after
the full partner meeting and their decision to move forward.
The process of negotiating a term sheet is best done with a
qualified attorney.
- Syndication
- depending on the firm, the amount of financing, and other
variables, there may be a process of finding a co-investor.
This can be trivial or a whole other sales cycle. Given the
potentially serious politics involved in deal syndicates, this
is a variable that should be discussed during the qualifying
phase (e.g. who do you do deals with? what is your attitude
toward investment partners? etc.)
- Closing
- non-trivial. This is where you learn a lot about your
prospective investor/partner. Subtle deal points not covered
in the term sheet may perplex and disturb you. Be sure to have
a good attorney and to remain focused on the ultimate goal:
closing. This stage may take a month or more.
Solicit
feedback
As you progress through these
stages it is critically important to know where you stand and the
objections may need to be overcome. This means getting feedback.
It is remarkable that well over half of the entrepreneurs that are
invited to give us a pitch (already a select minority) never call
back. They neglect to follow-up or solicit feedback. This is a
first test of your entrepreneurial skills. After all, raising
money requires sales skills. You need to close the business and
this means asking for feedback, and ultimately, for the money.
Create
urgency
The best outcomes in fundraising
generally result from creating a sense of urgency. Most investors
are literally overwhelmed with options for where to invest. The
challenge is to rise above the clutter. The hottest deals manage
to create a sense of urgency on the part of investors. So what do
investors want to see? Among the characteristics most valued are:
Experienced management - a seasoned team may be the biggest
variable in the fundraising process. Add a proven CEO and your
odds just jumped up. Market momentum - nothing works like real
customers. Short of paying customers, prospect references work
well. More is better. This will reduce due diligence time by VC's
dramatically. Term sheets coming - if others are showing real
interest, this may ignite the fence-sitters. This is also a
dangerous gambit if there is no real momentum.
Close,
close, close
Raising money from investors is
strategic selling at its highest form. It requires you to navigate
the waters of multiple decision-makers, with mysterious or unknown
decision-making processes. It puts you under extreme scrutiny by a
variety of skilled analysts and spreadsheet jockeys. But, if
you've identified the next big market, recruited a core team of
proven professionals, built an interesting product or prototype,
and battled the forces of inscrutable investors, success is sure
to follow.
No one said this would be easy, and
it isn't. But the best entrepreneurs know how to sell and to build
confidence in themselves as executives. As in any sales process,
stay focused and have several alternatives in the pipeline.
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