Tips on talking to a venture capitalist

All successful entrepreneurs have gone through the concept and startup phases in their ventures, usually with the expectation of marching boldly through the remaining three stages: growth, maturity and harvest. In most cases, the concept and startup stages are self-financed or funded by friends and family and, in some cases, by angel investors.

When you reach the growth phase, your concept is proven and you have some bona fide customers with real revenue. It is now critical that you grow your business by increasing your production capacity and/or by expanding your market reach. This rapid growth will typically require more capital than you have a right to expect from friends and family or angel investors.

This early growth stage is the time that you will want to talk to a venture capitalist. Most VCs are not interested in any startup that doesn’t already have a strong and predictable future revenue flow. Some VCs expect the annual revenue stream to be more than $10 million to $25 million before you’ll even be invited to sit down with them.

By David M. Brown
Brigham Young University

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