This is a guest blog from RWTH Aachen University’s Introduction to Venture Capital course. In this free 6-week course, Professor Malte Brettel and several industry experts share their knowledge on how venture capital works and provide helpful advice to all founders and entrepreneurs looking for funding through venture capital.
Approaching a venture capitalist might seem like a scary thing to do, especially if you have never done it before and really need funding for your startup. But don’t worry, Introduction to Venture Capital: How to Get Money for your Startup will thoroughly prepare you and provide sound advice to help you feel more confident when approaching a VC investor.
In Introduction to Venture Capital: How to Get Money for your Startup, you will not only learn what venture capital is and how VC investors work, but you will also learn about a great tool, which will help you increase your chances of acquiring VC money. We call it the “3P framework for how to get financed by venture capitalists.” This framework can be used as a checklist and will provide guidance to better prepare you when approaching a VC investor. The framework comprises of three main agendas and includes all the dos you have to get done in order to increase your chances of getting VC funding.
3P stands for Papers, Process, and People. In each agenda, you will be given certain questions to answer and certain products to provide. If you can check off every item in each agenda, you have done your homework and are ready to approach the VC!
The 3P framework will be presented in Week 3 of our course, but we are happy to share some of its main points with you below.
Papers – this agenda serves as a list of important documents you have to prepare, or at least have to think about, before you contact the VC. The most important for a first approach is your pitch deck. As you progress through the process, you also will be handed a draft for a term sheet and it’s important to know in advance what to expect from that.
Process – this agenda is to remind you of the steps you have to take and the appropriate order to take them in. It is very important that even before you contact a VC, you make up your mind about whether venture capital funding is right for you and your company in the first place. Not every venture is (already) a good candidate for VC funding.
People – and lastly, you and your team will have to make a decision on who is running the process and who will be the face of your company. The person giving a presentation at the VC’s office does not necessarily have to be the same as the one in charge of all the paperwork.
While there is a lot you have to do and get right, there is also a list of things you should definitely avoid when dealing with venture capitalists. The Guy Kawasaki Blog is a good resource for the infamous don’ts. We have summarized them for you in this exclusive preview from the third week of the course.
There is a lot more to know about the 3P framework, tips for dealing with VCs, and information on venture capital in general. Join us in Introduction to Venture Capital: How to Get Money for your Startup today!