How do I raise venture money with no previous experience?
Internet in Business mentor Jakob Nielsen responds to the following question from an inc.com user: I have no experience raising capital, how can I make contacts in the venture capital industry? Once I have their attention, what specific questions will I have to answer?
Jakob Nielsen responds: In my opinion, your prospects are probably dim. That's because contacts are the best way into the venture capital world. But once you have closed the first VC (admittedly hard), others are more likely to follow.
One thing every potential investor will want to see: the business model and cash flow projections. The figures shouldn't be pulled from thin air; they should be substantiated with a value proposition: Forthese reasons, this service will be worth this much to the users, so we think we can get them to pay $x. How many people are in the target market and what market share can you realistically gain? Have background material prepared to explain how and when you will have something real -- as opposed to a demo. Use realistic estimates, and provide a burn rate estimate.
I think one of the best ways of attracting attention is to have a short simple demo of the new Web site or other product idea. Remember that venture capitalists are working through a pile of ideas, and generalities are easy to dismiss. But specific screen images that show how the service will work can be captivating (assuming, of course, that the idea is any good to begin with). A demo that cannot be substantiated will get you nowhere, but it could be a good lead-in to the rest of your presentation.