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Why do only a small fraction of the business plans that are sent
to venture capitalists
get funded? Most would simply answer that there are too many deals
chasing too few
investment dollars. Venture capitalists will tell you that the real
reason is that there are not
enough "quality" deals.
The entrepreneur and venture capitalist often view the "quality"
of a deal very differently. The
inexperienced entrepreneur often makes the mistake of not realizing
that the venture
capitalist will judge the "quality" of his or her deal
relative to other deals that the venture
firm is considering. So the entrepreneur must be cognizant of the
fact that raising money
is not simply an exercise in selling yourself and your deal to win
a scarce amount of venture
capital. Rather, it is truly a competition against other startups
to win the most "mind-share"
of the venture capital investor. Entrepreneurs who are the most
successful at raising
venture capital financing understand this fundamental point and
strategically market
their deals based on this knowledge.
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