If you’ve been following our From The Trenches blog series, you know that part of our mission is to educate entrepreneurs and assist them in their company building journey. To help with this, our experienced partners are here to answer your burning questions, so send them to us!
Q: When should an entrepreneur approach a venture capitalist?
A: Entrepreneurs should begin networking as early as possible to understand the VC landscape and begin building a pipeline of prospective investors for future fund raises. It is always positive to have a first conversation before you need to ask for capital. Furthermore, VCs like to have a history with a company to track their progress over time. This kind of history can help a VC get to know the team and better understand the business and expedite some of the diligence process.
Next, fundraising strategy should consider value inflection points in the company’s lifecycle. The process of raising capital can be improved when the company has hit key milestones like a new product launch, adding new clients, or reaching financial targets like $1 million in Annual Recurring Revenue (ARR). Companies that have already raised venture capital can lean on their investors to help strategize when a raise is appropriate, how to build out the pitch, and who to target as potential investors.
—Jill Raderstorf, partner at the Ohio Innovation Fund