How to Raise Venture Capital | Entice Investors to Fund Your Startup Idea


do you wanna earn a hundred percent of a company that makes a hundred thousand dollars a year or do you rather own 50 percent of a company that makes ten million dollars a year of course you want to 50 percent of the company that makes ten million dollars a year you know what the difference is venture capital hi everyone I’m Neil Patel and today I’m gonna share with you how to raise venture capital C over my lifespan I raise in excess of twenty million dollars that may not seem like a lot it’s because I’ve learned that you shouldn’t raise more than you need sure some people raise hundreds and millions of dollars and then their company fails and the VC’s take the whole thing the key is with venture capital this is the first thing you need to know don’t raise too much just raise a little bit more than you need and the reason I say a little bit more things always go wrong you may think oh I just need this much money and then things will go right and I can do this and that but always goes wrong so always add some padding now here’s the thing that most people don’t tell you about venture capital when I first started off I would go to VCS and pitch them like here’s my idea it’s cool it’s the next best thing since sliced bread you have to invest and you don’t they all said oh cool yeah I’m interested I’ll let us think about it and we’ll get back to you you know what they did they never got back why because I didn’t build up a relationship with them see venture capital is all about who you know it’s not about going out there and just raising money from random people it’s really about raising money from the right people and what I learned about venture capital is when you build up a relationship and you get to know people they’re much more comfortable giving you the money why because idea they invested and they know this is probably not gonna be the idea that your company ends up with in which ideas change over time when you first start with is usually not your end company beings pivot and adapt so people invest in others that they know for example did you know Twitter start out as a deal a deal was that podcast company and then they’re like oh this isn’t working and within there they spun up Twitter podcasting Twitter do you see the resemblance no I don’t then either they understand ideas change do you think they’re happy doesn’t matter Twitter stocks down compared to when it first came out they still made billions of dollars and that’s the point I’m trying to make changes so when you’re raising money you have to go after connections and building those networks so the way you do that is you go to events like TechCrunch they have conferences who are at the TechCrunch events investors Mashable has meetups who are at those kind of events investors startup events all those type of places like San Francisco Boston New York these big cities what’s there all the startup related stuff if you don’t meet the investors get to know them provide value and build that relationship you’re not gonna raise money now before you pitch them you have to get to know them first that’s the biggest mistake I see people go and they raise or they try to raise money which never really happens from random people that they don’t know and then usually in most cases ends up with a disaster don’t do that network with them get their feedback before you pitch them for money now that you got that away you need a create a deck there’s a lot of amazing decks if you go to SlideShare dave McClure once release a deck that shows you how to raise venture capital I understand technologies change but the same pitch that worked back then works now and if you follow that you will be better off and you should have an easier shot and raising money now here’s the thing you need to know before you go out there and you try to raise money one if you’re not passionate you’re probably not gonna get money too if you don’t have a co-founder again it’s gonna be really hard to raise money they know you’re not gonna be able to do everything if you’re a business guy go find that engineer if you’re an engineer go find a market or a design or a product person you want to have up to one or two more co-founders so in total that would be there be two or three co-founders right because you’re also including yourself now that you got your co-founders you want to go and pitch a big idea if you’re gonna pitch something that could make a million dollars a month you think investors gonna give a of course not they’re not looking at a credit does ten million a year they’re looking for the next Ober Airbnb eBay Google Microsoft you get the point so create something that’s really huge they’d rather have you go for a big gigantic idea or lose money they don’t want you to create a company that does 20 million bucks a year and solves for fifty nine it doesn’t do much for them they’re owning twenty to thirty percent of your company and that’s they take in each round and expect that once you raise money once you’re gonna raise more and more money so go after a big idea or else no one’s gonna give it to you and your first round you can raise a few million bucks you don’t have to have revenue but after you raise that first initial investment expect to create revenue and whether you have a lot of revenue or a little you should always be fundraising before one year before one year your money runs out raise money that’s right that may sound like a big timeframe most people do it six months before they run out of money but you want to have a healthy cash reserve or else you’re gonna find a much harder time to raise money so if you ever tried raising money or struggle out there just leave a comment below and I’ll tell you what you did wrong I hope this video helps you if you liked it please subscribe to this channel like the video share it let other people know about it thank you for watching

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36 thoughts on “How to Raise Venture Capital | Entice Investors to Fund Your Startup Idea

  1. Hey Neil, how to approach the VC's if the Idea is very common and existing but the industry and business model is profitable?

  2. Thanks as always, Neil! Just now getting to the point of considering taking on a small VC investment. This really helps!

  3. I am starting a news/ media website for the Brazilian market which is huge. The idea is not innovative, it is going to be just another news website, but knowing that the market is supportive, and competition is not large, I still believe that it can be a good thing to do. I wish I could rise some money to start. DO you think that American investor cares investing to the audience in Brazil? yeah, that is a 3rd World country, but the company will be American, and I am inspired by BuzzFeed which has also been making a big buck over there. please let me know your thoughts. The page is almost done and in few week it is going t be launched.
    Best,
    C.

  4. We are bootstrapping our company and we wanted to raise capital through crowdfunding or crowdsource what are those websites.But nothing for healthcare based crowdsource sites. Anyways we are yet to source our VC and our business catchment area is a very much new concept and its an app based solutions and we are serviced based e-commerce company. Wanted to know what is the best pitching techinics I can meet VC's. Appreciate your genuine feedback and let us know what is the best way to move forward with SEED FUNDING or ANGEL FUNDING.

  5. A small tip and you’d have realized this by now – is to not yell at your videos.

    I like your content, but it’s just not the right way to present it, to constantly be loud and screaming.

  6. Hey Neil, love your content! Keep shouting and doing your thing! Do you have any tips for raising funds for a nonprofit association or social entrepreneurship that's focused on the local community by solving issues in agricultural industry with the use of upcoming technology?

  7. So, when asking for money, how do you know how much you need? Enough to survive for 2 years (of salaries, marketing, offices, etc)?

  8. Hi sir , I am Vishal from India I want raised 500 million dollar for my idea . I have only my idea at this time and I want convert my idea into reality . My idea about change the way of using system.

  9. Neil, Great presentation. Marketing to rapport build is so important for sales and…. for raising capital. And you need both.. nice job

  10. Hey, Neil Thanks for this precious Knowledge. The Value you are creating for us is unmatchable. My question is How to find that person with whom I can Co-found the company? I guess its a silly question but I seriously don't know :/

  11. I learnt that, VC invest according to the valuation of company.
    But how can my company have value if its just an idea right now?

    Will VC fund my idea only?

  12. Thank you! This is awesome, some of the most concise / real insight I've found so far and all of it has been 100% – from my experiences so far (bootstrapped a startup to profitability – building a game changer now). I am very interested in narrative – in how you decide how you go into a meeting and do you drive massive vision, do you give realistic, conservative projections or pitch aggressive projections. And finally, how much do you position the "now" v. "future"

  13. Hi Neil, that was an excellent explanation of the value of connections over technology when you go for that first raise. I figured that to a pretty good extent it's about who you know, not what you know, and you hammered that point home. I have 2 small questions in line with this reasoning:

    TL;DR:

    1) Isn't forming connections a way of using people? How do you right this in your mind?
    2) How do you network if the VC's whose expertise/experience you need are in different geographic markets?

    LONGER VERSION:

    1) If you go out looking for connections to get you to investors, aren't you using people? It seems to me that if all you're doing is using people as a ladder, they'll avoid you, making it harder for you to get where you need to go. How do you handle this viewpoint? My character won't let me make connections if I feel like I'm just looking for referrals (Humans are Underrated, as Elon Musk would put it).

    2) So you decide to go out there and start forming connections. What happens if you're geographically restricted from the firms that are objectively best suited to guide your vision into a young, healthy startup? For example, I live in Michigan, and to put things delicately, I don't have a whole lot of discretionary income to travel to San-Fran for a TechCrunch meet-up. What I do have is a fundamentally new hardware technology, still very much incomplete, but in my view with a lot of promise. I don't want to apply to random VC firms in my area because they're all doing software and fintech, or lifestyle products. VC's really do bring more than money to any engagement, and I would prefer to work with firms that have strong tendencies to support the kinds of hardware technologies that other VC's would stay away from. So how do I network with Silicon Valley's best hardware VC firms (eg. Khosla Ventures, Kleiner Perkins, DFJ) if I can't attend all the fancy meetings? I'm working on something that really needs to get out there, and I need the best team to guide my decisions. Cold emails and stuff seem (maybe I'm wrong) like a non-starter, so how do potential founders in different geographies with no prior-networks form these sacred connections? How did you tap into the VC landscape? Sorry, that's a lot.

    Oh, and I'm probably a year, maybe 2, from even considering a raise, so you can treat everything as hypothetical. I've got time……. I just want to do things right, slowly, patiently, and with the best advice from people like you who have been there.

    Thanks.

  14. Hay Neil, I get so many people interested, excited and they say this will make us all rich with my ideas and they are going to really help me by… and always that's the last I ever hear from them.

  15. Of course, you want to own the 100% percent small company because with 100 000 dollars profit each year you can easily grow it and pass the 50% big company.

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