Homeschool Fiction

For the past 2.5 years I, with the help of a really great team, have been working on our software company, ZenActOS, Inc. We’ve been seriously pursuing our first round of funding (as the experts correctly told us to say) for over a year. While we are still raising our first round of funding, we’ve become entrenched in the necessary steps to pursue this dream. I decided to write a “How to” on this topic in order to demystify and simplify the process for others. I wish all of my readers the very best of luck in all of your endeavors! Have fun!

Step Zero:

Spend some time figuring out what you personally are good at. Read the Rich Dad, Poor Dad books. Figure out how to turn what you are good at into a “B” business. Start raising private capital now (from yourself, friends, and family).

Step One:

Start a legal business. Venture Capitalists (VCs) will not give money to individuals, only corporations. You need to act like a business in order to be treated like one.

Step Two:

Build a solid team. VCs will only give money to a solid business team they believe in. The people definitely matter! Are you not sure about a particular person? Now is a good time to get rid of them. The more solid and strong your team is, the better. It is much better to have a hole in your structure, than to have the wrong people shoved in just for appearances. VCs are often happy to help fill in gaps in structure, but they can’t fill in spots if you aren’t clear where your strengths and weaknesses lie.

Step Three:

With your team, build an impeccable Business Plan (the Executive Summary is the most important part, as it is often the only part looked at by VCs), elevator pitch (2-3 minute pitch), and 20 minute slide presentation.

Step Four:

Get in front of some real live people to practice on. No matter how great you think you sound — you don’t. No matter how great you think you are dressed — you aren’t. Get your friends to tell you these things, so you can fix them before VCs think it. Beg for honest feedback and don’t take it personally. You’ve invited only people who are 100% on your side to this presentation. Thank them profusely and mean it.

Step Five:

Sleep on all the advice you’ve received so far. Then, spend at least a week going through it with your colleagues. Your business is your business! Don’t forget that no matter what, you get to make the final decisions.

Step Six:

Get appointments with as many Venture Capitalists as you can. This is hard if you don’t know anyone. It’s also not usually free. Be prepared to be on a waiting list for at least 6 months (usually longer) and to pay anywhere between $250-$6000 just for the privilege of giving your presentation. How well you present and how in line your company ideals are with those of the particular VCs you present in front of will determine whether or not you will receive a follow up appointment. This is NOT the stage where you will receive a check…

Step Seven:

Have some patience. You’ve presented! Congratulations! Now, take all that feedback into your head and heart and discuss it as dispassionately as possible with your colleagues. Write thank you e-mails to everyone that helped you get this far (especially the VCs you’ve just presented in front of).

Step Eight:

Assuming you’ve piqued a VC’s interest: Get ready for due diligence. Due diligence is when venture capitalists look at all of your employees and your company from as many angles as they can, depending on what their own unique criteria are. This is a good opportunity for you to check them out too. If you end up receiving money from a firm, you will have a long term commitment with at least one person. You want this relationship to be good — built on mutual respect and interests. Some liken this relationship to a marriage. I can definitely see the similarities, although the VCs will probably know more about you than your spouse did when she married you.

Step Nine:

Keep up the communication. Don’t go longer than 10-14 days without some sort of communication, unless it’s been predetermined that one of the parties will be unavailable for some reason.

If things fall through at this stage, don’t give up! Keep moving forward. Just about all deals fall through at this stage, so you need to just chock it up to good experience and start over (with more knowledge) again. Don’t forget to be working on your actual business in the mean time (maybe you won’t need funding if the capital raising process takes long enough).

Step Ten:

Congratulations! You’ve made it through Round One. If you meet your predetermined benchmarks, you’ll be right on schedule to do this all over again — I’ve been told the second round of funding is much easier to go through than the first.

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By: Lisa