Have you ever looked out for some venture capital to start a new business? If you have, you were required to make a formal proposal. The venture capital proposal is thoroughly studied by VCs and they measure the cons and pros of the deal before funding it. Therefore, entrepreneurs should plan wisely to increase the likelihood of acquiring venture capital.
There are several factors that VCs consider before funding the business. These factors should find their way into the venture capital proposal. They include fundamental analysis, financial analysis, portfolio analysis, and divestment analysis.
Fundamental analysis mainly focuses on the examination of the fundamental aspects of business and includes business history, management, products, markets, risks and operational aspects. Financial analysis basically is setting out the strategy of the firm’s financial outcomes as well as measuring the performance. Portfolio analysis comprises of going through the VC portfolio and the balance at the time when the venture capital proposal is made. Therefore, the proposal must include details of the investment in term of the size, the geographical location, and development stage. Finally, divestment analysis includes a perception to the VC regarding the time, method, and valuation of the company upon divestment.
When a venture capital proposal is presented to venture capitalists, they study it properly. If they think there is any scope of profit, they accept the venture capital proposal.