The following article by U. Mahesh Prabhu was first published by Swiss Entrepreneurship Magazine

To put any business Idea in motion – funding is imperative. When scope of entrepreneur’s own money proves inadequate external funding, then, becomes a necessity. While Venture Capital Funding is lucrative, it’s certainly not easy to get. It’s a result of entrepreneur’s ingenuity, resilience, faith as well as preparations. Here are a few things an early stage entrepreneur needs to know while seeking venture capital funding:

1. DISPLAY CONFIDENCE IN YOURSELF AS WELL AS YOUR ENTERPRISE: If you don’t have faith in your own idea (read start-up) don’t pursue it and if you do have the faith ensure that you carry it well. None can represent your venture as much as yourself – this is truer when you are running a start-up. It shows in the way you present it to your prospective investor in your body language as well as emails. If you appear timid, uncertain or even confused – it’s almost certain that you’ve turned away the investor. Always remember the maxim: first impression is the best impression and always go for a kill!
2. DETERMINE YOUR INVESTOR: Don’t approach every investor you find – at least not in the beginning. Do your research using search engine – do it thoroughly. Also, don’t ask a sum just because you think the investor can afford it. Ask the sum which you think can make the needed difference to your start-up and put it on a growth trajectory. Investors are not stupid; even if they are – it’s best to assume they are intelligent. This ensures your preparations are best and ensures greater chance of getting the right funding.
3. ENSURE INVESTOR CREDIBILITY: Venture capital firms today operate like any other business ventures. Determine the decision makers in these VC firms. It’s their credibility which determine the credibility of their firm. Check if they’ve any murky past. Search engine are well equipped to handle such tasks these days by pointing you to relevant sites.
4. SHARE YOUR IDEAS CAUTIOUSLY: If you’ve an idea it’s important that you protect it – even with investors. One of the trickiest thing in investment procedure is to determine what amount of information about the business idea you are willing to share. Not every VC firm will invest – therefore, if you share crucial business information it could fall right into the lap of your competitors. You cannot share everything but if you share too less it’s sure to be detrimental to the investment process. It’s best to ask for a Non-Disclosure Agreement (NDA) before you make any critical ideas or, even, processes open to investors. And you must do so only with the top management team of the venture capital firm not those in the bottom or middle of the pyramid.
5. KNOW EQUITY YOU CAN OFFER IN EXCHANGE FOR FUNDING: You need to know key difference between valuation and investment for equity. If you are expecting 2 million for 20 percent of your company’s equity, the valuation of your company should be 10 million. Before you go to an investor you should get your evaluations done independently from a reliable financial consultant. This will add weight to your claims forth investors during negotiations. You must also know how these evaluations are done and have a clear road map with respect to growth of the company.
6. NEVER BE DISCOURAGED: Entrepreneurs are often discouraged when their investment proposals are turned down. If you can’t manage a few discouragements it’s as good as to believe that you are not meant for entrepreneurship. A brilliant spark of idea goes nowhere without persistence. Persistence stems from belief in one’s own self as well as ideas at all times.