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What do venture capitalists look for in startups?

One of the most difficult parts of getting a small business off the ground is finding adequate funding. Ambitious entrepreneurs look for funding from multiple sources, like business loans, family and friends and even crowdfunding. But there is one particular source of funding that every entrepreneur dreams of: A deep-pocketed venture capitalist who is willing to invest.

Of course, venture capitalists are not easy to come by. They are very discerning when selecting startups in which to invest. However, there are a few core things that venture capitalists seem to look for when investing in startups.

Knowledge

Savvy venture capitalists are not going to go into business with entrepreneurs who do not seem to know what they are doing. When making your pitch, demonstrate your extensive knowledge of your company, your industry, and your competitors. Many startups hope to dazzle would-be entrepreneurs without backing up their words with information. Provide hard data about your metrics, finances and goals.

Persuasion

You may have only one chance to impress an investor. Make it count by persuading potential investors that your company has what it takes to recoup their investment and make a profit. Convince them that your company is profitable, unique and innovative--a few persuasive techniques that you can incorporate are personal stories, customer feedback, research and financial history.

Passion

No startup can get far without passion. Venture capitalists thrive on it. They will want to see that you are excited about launching your business. Unenthusiastic entrepreneurs will not appear to have the dedication that investors are looking for. Entrepreneurs who are passionate about their business will be far more appealing.

Startups and venture capitalists

While it is rare for a small startup to attract the investments of venture capitalists, it does happen. But when entrepreneurs and venture capitalists do pair up, they can accomplish amazing things.

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Robert Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the May issue of The American Lawyer & Corporate Counsel magazine.Alex Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the December issue of The American Lawyer & Corporate Counsel magazine.

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