What do VCs want?

“Big Money,” advises Shirley Speakman, Director of Investments at the Investment Accelerator Fund (IAF), at Entrepreneurship 101 last week.  During her lecture on ‘Terms of Investments’, Shirley helps our audience understand what motivates investors to take a risk on a startup, from a VCs point of view.

One of every ten invests may be successful

To be a candidate for venture capital, you need to make them BIG MONEY.  Not all businesses fit this criteria but if yours does, you will need to be well prepared.

Before approaching potential investors, read this article: Are you ready for a private investor? and familiarize yourself with the following terms:

If you decide that you are ready to seek investment, you need to get your toolbox together. These documents will help communicate your business goals to a VC: elevator pitch, executive summary, pitch deck, business plan and white paper. For more on how to use these effectively, watch the Business Communication Tools lecture.

The next step is to get their attention: How to meet and engage an investor. VCs are going to take the time to get to know you – they’ll ask questions about your product or service, business model and team, to name a few. Shirley recommends that you also take the time to get to know the investors who may be taking a stake in your company: who makes the decision and how, where they are in their fund’s life-cycle and what their appetite is by finding out about their most recent investments.

Now it’s time to make a commitment by signing the term sheet.  The purpose of a term sheet is to protect investors from risk if your company does not achieve returns. To learn more about the terms and conditions of a typical term sheet, as well as common pitfalls to avoid when engaging with investors, watch the lecture video.

Check out the ‘Quick Hits’ video for an overview of Shirley’s presentation:

Next lecture: Raising Money from VCs panel discussion.

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Marielle Voksepp

Marielle works as part of the education team at MaRS. She helps entrepreneurs get access to business resources both online and in-person. See more…