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Is There VC Money Out There?

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Sometimes it feels like you’re just spinning your wheels. This is how I felt a few years ago when I was helping one of my clients raise VC (venture capital) funding. The client was an early-stage, Southern California-based networking company…

I started by creating what I felt was an awesome VC prospect list with 455 prospective investors.

The list looked like this (number of prospects in parentheses):

  • Priority A: Strategic/Corporate Investors (24)
  • Priority B: Most Active Southern California Investors (24)
  • Priority C: Active Southern California Investors (25)
  • Priority D: Most Active Networking Investors CA-based (72)
  • Priority E: Active Networking Investors CA-based (88)
  • Priority F: Most Active Networking Investors U.S.-based (46)
  • Priority G: Active Networking Investors U.S.-based (176)

The list itself took me days (and a proprietary database) to compile. As any direct marketer knows (and raising capital is direct marketing), the quality of the list is everything. For example, if you’re trying to sell a franchise opportunity to folks at a nursing home, you’re not getting any buyers no matter how good the opportunity is!

Armed with my list and my teaser email (teaser email = solicits interest without giving away the farm), I started calling and emailing investors.

And I had lots of early success.

We had about 20 first meetings with strategic and venture capital investors. And the result... nothing.

We only got about 5 investors who explicitly said “no” but the others weren’t quite ready to write us a check.

So, naturally I started getting discouraged. As you can imagine, I had already invested over one hundred hours on this project and had no multi-million check to show for it.

But fortunately I remained persistent, and eventually one investor referred me to another investor (which, believe it or not, was not on my list of the top 455 prospective investors!!!!) who wrote us a $3 million check.

I bring up this story since I’ve been getting a lot of questions about whether or not there is VC funding out there right now.

The answer is an emphatic YES. It is out there. And like always, it takes great knowledge and persistence to get it (and probably now more than ever).

Here are the facts. According to the National Venture Capital Association, 3,808 ventures raised VC funding in 2008 totaling $28.3 billion. And, according to the Center for Venture Research, 70,000 ventures were funded by angel investors last year totaling $37.2 billion.

So lots of companies continue to receive funding from venture capitalists and angel investors.

It’s mostly a matter of REALLY wanting to receive capital for your business and making the investment to do it (i.e., the time/money to learn how to, and the time needed to execute on, a capital-raising campaign).

So, capital IS still out there, and YES, you can raise it!

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aaron says

This article definitely confirms that entrepreneurship is still alive and investors still exist.
Posted at 2:34 am
Ed Janisse says

We just started raising equity in a First Round Reg D Offering. Alternative Energy is the new buzz word in VC's and they want protection with patents so we are lucky. We have raised $70,000.00 without advertising. It is hard getting turned down but always ask for a referral.
Posted at 7:24 pm
Michael says

Hey, Dave- want to share that VC list with me? I'm sure I have something fun to barter for it ;-) Best, Michael
Posted at 7:51 pm
Glenn Hankinson says

Excellent....we are experiencing the same, have endured and will continue to endure! Persistance is great yet the energy to persist maybe the hardest?
Posted at 10:09 pm
Jeff says

David, Great article. I have a Client that I have been trying to get venture capital funding for since last December. I am hoping that perhaps you may a take an interest in it David. I have a Business Plan and Executive Summary.
Posted at 5:52 pm

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