1. Is it possible to say what the venture community is generally looking for when they decide to meet with an early stage company?

While each venture capital firm establishes its own investment criteria (obviously influenced by their comfort level with any given market or industry), I think it is safe to say that once you get past the firm's portfolio preferences, four or five criteria are on just about everyone’s list of 'must haves':

	A strong, experienced CEO
	A carefully selected management team that can execute the plan
	A clearly defined market that will allow the company to scale
	A product/service offering, with IP protection and/or other competitive advantages
	A sustainable, compelling business model.

2. Could you be more specific about what the investors are looking for in each of these areas?

CEO: The need for a strong, experienced CEO cannot be overemphasized. You may have developed an extraordinary breakthrough in science or technology, but unless you know how to commercialize your ideas, you are likely to fall into an investor’s "too hard" basket. VC's review hundreds of business plans each year and only invest in a few carefully selected start-ups. The competition for their time is beyond imagination. As a result, they are generally very quick to pass on an otherwise good plan if it is not clear, from the very start, that there will be a strong CEO at the helm who already knows how to make money.

Management Team: The rest of the management team must share a common vision with the CEO. They must have the knowledge, skills and experience required to execute the plan in a timely manner. While it is generally acceptable to have openings on the management team, it is not acceptable to have ‘blind spots’ in that regard. Said another way, it is perfectly acceptable in most cases to go in with a great business plan that requires the addition of a couple of key players, but you wouldn’t want to try to hide the fact that you have some shortcomings on the team.

Market Analysis: Your market analysis needs to indicate that you are able to look at your product/service, in the context of other available science or technology, and can clarify the degree to which your offering is going to impinge upon the market place. Ideally, you can construct a sustainable business model in one vertical segment of that market in a reasonable time period. The implication being, that if you can be successful in one vertical, that you can repeat this success in other verticals and 'scale' into a very significant business. All too often, we see plans that are narrowly focused on the products/services themselves, with sales projections that are based upon purchases by early adoptors of your offering, and assumptions that are not very far reaching.

Product/Service Offering: Curiously, your knowledge and expertise regarding the science/technology behind your offering is often considered 'a given' until later in the funding process. Remember, you are asking investors to believe that you can help them to generate a return on their invested capital at a rate that is considerably higher than other opportunities that they are looking at. You are not asking them to become experts in your field. They may have learned quite a bit about your field from other investments they have made, but when it comes to the science/technology at the heart of your offering, they will generally assume that you can do what you say you can do. Initially, they will be much more concerned about the business implications of your value proposition. Focus on the problems, interests and needs of potential customers, the competition, your competitive advantages, on IP and other protections, etc.

Financials: Your financial model needs to present a compelling reason for an investor to take money out of his/her pocket and give it to you! You need to demonstrate a clear path to profitability for yourself and your investors.

Can you clarify:
	How you got started?
	How well you used the funds of family, friends and other early investors?
	How you intend to use the proceeds from this round of investing?
	Your confidence level in your sales projections? Margins? Expenses? Breakeven analysis?
	When you will become cash positive?
	How all this ties back to your market and product/service analysis?
	The risks involved in the plan?
	Your confidence level in the plan?
	Your exit strategy?

[return to top]

3. How do I know which venture capital firms to talk to?

Thanks to the Internet, it has become a lot easier to know whom you should send your plan to. You may want to check out www.ventureone.com or www.vfinance.com for comprehensive listings of every major venture capital firm in the country and many parts of the world. By studying their portfolios, you can get a pretty good idea of who has been investing in your space. Most firms also give you their criteria for investment, a listing of their partners and associates and more. However, make sure that you are well along in the development of your business plan before you attempt to get the attention of the investors on your short list. You are not likely to get more than one look.

[return to top]

4. How will I know if I am ready?

If you and your team are feeling good about your ability to step up to the challenges that we have spelled out in our answers to the first three questions, above, then you are probably ready to go.

	Put your Executive Summary on top of your Business Plan
	Put a cover letter indicating who they should contact for further information on top that and
	Put it in the mail!

If your business plan truly stands out from the rest of the pack, you will get a call back in a timely manner. The venture community is always on the lookout for good investments. If you represent a good investment, they want to hear from you.

[return to top]

5. How do I become a Post Road Ventures, LLC client?

Like the venture capital community itself, Post Road Ventures, LLC receives hundreds of business plans each year. It is not any easier for us to decide which new companies to work with than it is for the VC's themselves. The process begins by filling out the questionnaire in the Company Survey page of this web site. That will give us a feel for where you are in the funding process and where we may be able to add some value.

If we believe that you are on to something that our colleagues in the venture community can relate to at this time, we will invite you in to talk with us about your plan. Very importantly, if we do not believe that we can be of assistance to you for any reason, we will let you know that we have come to that conclusion. In many cases, we will recommend that you speak with one of our colleagues in the venture development community near you. Many colleges, business schools and government agencies are now involved in early stage development and we welcome the opportunity to steer you in their direction if we are not able to work with you at this time.

We only work with a handful of carefully selected companies at a time. This allows us to work closely with you, until your team and your business plan are where we believe you need to be in order to get funding. Only then will we begin the process of introducing you to a short list of VC's that have experience in your space. That will lead to a longer list of players as word gets out and interest grows.

Very importantly, Post Road Ventures, LLC stays with you all the way through the process. We receive no compensation for our consulting services until you become funded. For all these reasons, we have to be very selective about who we work with.

[return to top]