WHAT
YOU
SHOULD
EXPECT
FROM
A
VENTURE
CAPITAL
FIRM

05 Jul 2019

Knowing your presentation and facts about your startup are just two of the aspects you have to be prepared when approaching a VC for funding. We'll give you some tips on some of the others.

What You Should Expect from a Venture Capital Firm

As the tech industry heats up in Thailand, more and more startups are reaching the stage of development where they are ready to seek funding from venture capital (VC) firms. But knowing what to expect when you sit down at a table across from a firm who holds the key to your future is vital to ensure you secure needed funding. But just as you should know what to expect when you sit down with a VC, you should also know what they expect to learn from your presentation. According to Tommy Mazenc, Investment Manager, Corporate VC, True Incube, you should have a firm grasp of the money it will take to get you to the next step in your startup’s development and be realistic and honest in your goals. Don’t get ahead of yourself, but stick to attaining the next stage in your startup’s growth.

 

Venture Capital Thailand at True Digital Park

Establish a Relationship of Trust

There isn’t a reputable VC in Thailand that would ever consider taking another company’s idea and developing it on their own. That’s not the business they’re in. Holding back relevant details of your organisation, or insisting they sign a non-disclosure agreement is not the way to enter into any negotiations with a VC. They’re interested in hearing the nuts and bolts of your ideas and products because they’re interested in investing in them, plain and simple. They want to become a partner of your company and hopefully share in your success. But before they spend any money on your company, they need to know that you have the organisational, financial and business acumen, and the intelligence to follow through on your ideas. Be upfront in laying out your entire business plan and a detailed description of precisely where all the money would be going. Never be vague in asking for a monetary amount. When asked how much it would take to get your company to the next phase of development, saying “three or four million” is absolutely the wrong answer. If you don't know exactly how much it would take, it means that you haven't done the required financial work. It also means that you only have a vague notion of how to move your company forward, and that doesn't inspire confidence in any potential investor. You have to convince the VC that you are a safe and organised company in which to invest their time and money.

 

Meet with your VC at True Digital Park

Gaining a Valuable Partner

Many entrepreneurs who have established a startup and are well on their way to success, chafe at the notion of anyone else telling them how to run their business. No one knows their business like they do, is their thinking. But when you accept funding from a VC, you’re accepting a partner into your company. The VC is not a bank that loans you money, expects to be repaid, and otherwise has no interest in your business. A VC is an investment company that enters into partnerships with companies and nurtures them to success. There are in business with you for the long-haul. And this means that business partners have to work with each other and accept knowledgeable advice from one another. The VC that enters into a partnership with your company has likely been successfully involved with similar companies and ideas to yours. This is what attracted them to your company in the first place. Because they have prior experience in seeing the pitfalls and successes that a company like yours has undergone, they are your best source of knowledge in how to avoid the setbacks and capitalise on the successes that every company goes through on the road to becoming profitable.

Allow Your Relationship to Evolve

A startup is a dynamic entity. It reacts to internal ideas, external market forces and, often, pure luck on the rough and twisting road to profitability. You should be comfortable with the idea of handing over the reins of your company when a situation arises that you don’t have the business knowledge or experience to handle. Relying on the expertise and experience of the VC can be a lifesaver for your company at times, and you should be comfortable with seeking their help in a troubling situation. They often will appreciate that you have the intelligence to recognise when you are over your head and looking for advice to successfully deal with a situation. It's the sign of an excellent manager to value the welfare of the company over your pride and ego, and the VC will applaud you for it. It also doesn’t mean that they have lost confidence in your ability to lead the company. Everyone gets in over their head at times, but only smart and effective managers have the wisdom to recognise when they are. Your exciting ride in the tech industry may begin when you first sit down with a VC to discuss your ideas and your company. Going into that first meeting with the firm knowledge of what to expect and the preparation to satisfy what they will expect from you, will go a long way of helping your chances of being able to take that ride. Under circumstances that chances to meet with VCs are rare, True Digital Park offers VC clinic program for members to meet with our partner VCs. Learn more about our membership package here.

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