Is Your Business Attractive to Outside Investors?

Many small business executives waste valuable time in chasing venture capital or other sources of funding when in reality their companies are virtually impossible to fund with venture capital. There are many other sources of funding that better suit many small businesses, but often small business executives don't realize this until its too late to properly attract these sources.

We have a long track record of identifying and helping to build successful companies in software, healthcare, medical, biotech, and technology markets. If you can identify any of the following issues in your company then you need to contact Pedlar Ventures right away.

1. Does your business have some unique technology or service?

What that means is do you have a unique that product or service that addresses a large market? Have you developed new software, hardware, electronics, distribution systems, medical devices, bio-med solutions, new forms of energy, modes of transportation, etc. Something new!

2. Can your business carve out a significant and sustainable market share against existing market leaders?

Venture capitalist will likely not invest in your company if you are going up against Kraft, Ford, or Xerox, unless of course you have new and proprietary technology. The risk is too great to justify the expense. That's where your technology comes in, if you have developed something that opens up whole new markets or that will give you a significant lead in capturing the all important first mover position then you have a chance. If your products or services are just an add on or variation of an already existing technology where all the market leader has to do is make changes to their existing product, then you have little hope of being considered.

3. How much money do you need for R&D and to reach the market?

Risk versus reward, the typical Venture Capital fund wants to see that you require between $500,000 to $5 million. Above $5 million and most Venture Capital funds will want to bring in other funds to spread the risk and the deal gets much more complex. Venture Capital firms will want to see that you are going to maximize every penny and that you can get to market for the least amount possible.

4. Do you have a realistic go-to-market strategy?

Entrepreneurs and inventors are great at coming up with new products and business ideas, but will they sell? Have you considered who will sell them? What will it cost you to reach the market? Is consumer education required? Is brand awareness required? Will you have to develop your own distribution channels or are there existing channels that you can use?.

5. What level of customer support will your product require?

Venture Capitalists may pass you by if you have an outstanding product but it is going to cost $100 million to teach the public how and why to use it. Very complex products can require very expensive customer support and uncertain sales cycles.

6. Is the market that you will serve huge?

Venture Capitalists may not care so much about customer support or sales cycles if the market is so large that it out weighs the cost to educate the consumers.

7. Can your product produce gross margins greater than 50 percent?

If your “margins” are below 50% than the margin for error is too low. You won't have enough to sustain you if things don't go just right and there isn't enough profit in the deal to make it worth venture capital consideration.

8. Does your management team have the experience and skills to succeed?

Venture Capitalists are not interested in your learning curve and they certainly aren't interested in risking their money on your education. They are interested in strong management teams with proven track records that pertain to what you plan to achieve.

9. Are you and those now in your business committed to its' success?

How much have you invested to get this far? Who has invested with you? Do you have Angel Investors who have believed and invested? Has your existing Board of Directors invested? Venture Capitalists hate to be the only one with “skin in the game”. They are more likely to invest if they see a number of private investors already in, maybe an Angel Investor they know, maybe a law firm they have had dealings with.

10. Can your company achieve gross annual revenues of $25 million in 3 years, and does it have the possibility to reach at least $50 million in 5 years?