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

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Do you want 100% of a company that makes $100,000 a year? Or would rather own 50% of a $10 million company? ►►Subscribe here to learn more of my secret SEO tips: https://goo.gl/ScRTwc Find me on Facebook: https://www.facebook.com/neilkpatel/ Read more on my blog: https://neilpatel.com/blog Of course, you want to own 50 percent of a company that makes $10 million a year. You know what the difference is? Venture capital. Today, I'm going to share with you how to raise venture capital. See, over my lifespan, I've raised more than $20 million. 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 of millions of dollars and then their company fails and the VCs take the whole thing. The key is with venture capital is to not raise too much, just raise a little bit more than you need. The reason I say a bit more is because things always go wrong. You may think, oh, I just need this much money, and then things will go right, I can do this and that, but things always go wrong. 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 know what they said? Oh, cool yeah, I'm interested, 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 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 money. Why? Because the idea they invested in, and they see this, is probably not going to be the idea that your company ends up with. Ideas change over time. What you first start with is rarely what you end up with. Things pivot and adapt. So people invest in those that they know. Twitter started out as Odeo. Odeo was a podcast company, and it wasn't working. Then they came up with Twitter. Podcasting. Twitter. Do you see the resemblance? I don't. The investors didn't either. But they understand ideas change. So, go to events like TechCrunch, they have conferences. Who are at the TechCrunch events? Investors. Mashable has meetups. Who are at those kinds of events? Investors. Before you pitch them, you have to get to know them first. That's the biggest mistake entrepreneurs make. People go and try to raise money, which never really happens, from random people that they don't know. And it usually, in most cases, ends up in disaster. You need to create a deck. There's a lot of amazing decks. If you go to SlideShare, Dave Mcclure once released a deck that shows you how to raise venture capital. I understand technology's changed, but the same pitch that worked back then works now. If you follow these steps, you will be better off, and you should have an easier shot at raising money. If you're not passionate, you're probably not going to get money. If you don't have a co-founder, again, it's going to be hard to raise money. VC's know you're not going to be able to do everything. If you're a business person, find an engineer. If you're an engineer, find a marketer or a design or a product person. You want to have at least two or more co-founders. Now that you've got your co-founders, you have to pitch a big idea. Ventur Capitalists are looking for the next Uber, Airbnb, eBay, Google, Microsoft; you get the point. Create something that's huge. They'd rather have you swing big and lose money than not take any risk at all. They don't want you to create a company that does $20 million a year and sells for $50 million. It doesn't do much for them. So go after a big idea, or no one's going to give you money. After you raise the Venture Capital, you should always be fundraising. Before your money runs out, raise more money. You want to have a healthy cash reserve, or else you're going to have a much harder time raising money. If you ever tried raising money or struggled 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.
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Text Comments (87)
Dann Allen (14 days ago)
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.
Neil Patel (13 days ago)
Sorry to hear that, Dann
Float Circuit (2 months ago)
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.
Donald Coolidge (2 months ago)
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"
Neil Patel (2 months ago)
I am very realistic and conservative with projections but also aggressive in the sense that I let them know what they will be missing out on if they don't start improving their marketing.
Aman Dhakad (4 months ago)
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?
Aman Dhakad (4 months ago)
So, vc aren't going to help in starting up thr Company most probably.
Aman Dhakad (4 months ago)
Thankyou very much
Neil Patel (4 months ago)
Very, very unlikely. VCs want to see traction, growth, numbers, etc.
Subtle Ethos (4 months ago)
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 :/
Neil Patel (4 months ago)
There is no place to find the right person. They usually happen to appear at the right time ;)
Aleks Stoykov (4 months ago)
Neil, I love your content. All the best.
Neil Patel (4 months ago)
Thanks, Aleks!
Modus Robotics (4 months ago)
Neil, Great presentation. Marketing to rapport build is so important for sales and.... for raising capital. And you need both.. nice job
Neil Patel (4 months ago)
Thank you!
Tech Guru (4 months ago)
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.
Neil Patel (4 months ago)
Best of luck :)
Akash Izumi (5 months ago)
Please make videos about startup funding
Akash Izumi (5 months ago)
Please make video about trademark sir
Akash Izumi (5 months ago)
Which name should I trademark for my studio Akash animation studios or just akash Animation ?
Akash Izumi (5 months ago)
Sir I have another major question about trademark will you make videos about trademark I like way you explain its easy to understand
Akash Izumi (5 months ago)
Always welcome sir :)
Neil Patel (5 months ago)
Thanks for the suggestion
deepankar roy (5 months ago)
Why would a venture capitalist would invest in my company if I have not any innovative idea
Neil Patel (5 months ago)
Having an innovative idea helps ;)
Mauricio Berlanga (6 months ago)
So, when asking for money, how do you know how much you need? Enough to survive for 2 years (of salaries, marketing, offices, etc)?
Neil Patel (6 months ago)
You need to know what the money is going to be used for so the people investing know where their money is going and how they are going to get it back
Mr Brunomi (8 months ago)
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?
Mr Brunomi (8 months ago)
Thank you for reply Neil! I thought content marketing will be the way to go. It's time to start executing!
Neil Patel (8 months ago)
Thanks for your support! I think content marketing is a good place to start. Educate people about the need in the community or whatever cause you're targeting. Then let people know about your fundraising efforts to get them involved. Social media can be a huge help. You might also want to join local forums and communities.
Zubin Ajmera (8 months ago)
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.
Neil Patel (8 months ago)
Thank you for the feedback, Zubin. I'm constantly working on improving my delivery, and I'll take your comments into account with future videos. Thanks again!
Bogeybox Golf (8 months ago)
Neil, why are you yelling at us?
Cedric Proper (11 days ago)
In the spirit of this comment, I suggest this: "Because too many people are afraid of failing and not enough people are willing to succeed." If I raised $20M, I doubt I'd be quiet about it either. Everything Neil Patel is saying is true. This video is spot on.
Lion King (4 months ago)
Bogeybox Golf Clothing Club _ Shame on you. That is called passion. If you don’t like it, go to work for shitty and polite US corporations and you will innovate nothing!
Md Sk Johnny (8 months ago)
Yah..great tips to build a relationship with correct people. And after watching this video I wanna make a list of a financial relationship person. Thanks for massive tips for growing business.
Neil Patel (8 months ago)
Ha, thanks! And you're very welcome!
Bogeybox Golf (8 months ago)
Love this content. Just poking fun. We're a big fan of your growth tactics. Thank you for creating great content for entrepreneurs.
md kafilur Raheman (8 months ago)
Hey Neil plz make video about how to create dofollow backlinks without guest posting.
Neil Patel (8 months ago)
Good idea!
Emmanuel Paul (8 months ago)
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.
Neil Patel (8 months ago)
Check out this article: https://neilpatel.com/blog/pitch-to-investors/
Noushad Ranani (8 months ago)
Don't shout.
Neil Patel (8 months ago)
I'll try not to in the future. I get excited when I record :)
BlackDeath12345 (8 months ago)
How do we get u to invest in us neil?
Neil Patel (8 months ago)
By impressing me with the right business ;)
Rajendra Mandavi (8 months ago)
I want to know the future of price compression websites.
Neil Patel (8 months ago)
Only time will tell, Rajendra
Akshay patil (8 months ago)
*How to grow on YouTube*
Neil Patel (8 months ago)
There are loads of articles on my website that can help you: https://neilpatel.com/?s=youtube
MrSteeveAustin (8 months ago)
I appreciate the sharing of knowledge but it s so hard to keep watching when I feel yelled at.
MrSteeveAustin (8 months ago)
Not here to argue but look at the video without the sound and tell me it does not look like you are screaming. I understand the hype up but it s a bit too much. And the excitement is one thing but imagine we would be together in the same room. Would you talk in the same way? Just constructive criticism here.. P.s. I think there is reverb in the room and that does not help. Sound is really important for video.
Neil Patel (8 months ago)
Not yelling at you. Just excited about the content.
MD Rafiqul Islam (8 months ago)
Thanks Great Video.
Neil Patel (8 months ago)
You're welcome!
ELITES TECH (8 months ago)
What about raising money via ico.. what's the bad effect on that?
Neil Patel (8 months ago)
A lot of regulations!
Dhanur Sehgal (8 months ago)
Hi Neil. How to build a team if every1 in your college wants a secure job?
Neil Patel (8 months ago)
I like the first answer :)
waterdamage restoration (8 months ago)
Then you are in the wrong place, wrong community, wrong friends, and wrong school :) You want to hang out with those people who have the same or similar goal as you have. If they want a secure job, and you dont. You want to hang out with friends that want to start as an entrepreneur.
Hassan Mushaid (8 months ago)
Hey Neil would love to ask you a business question. A simple question on a decision.
Hassan Mushaid (8 months ago)
Neil Patel the question was should I give up my small agency targeting small business owners whilst it's gaining traction or should I take up on an offer and become a partner with highly skilled devloper and a designer to create a new brand to target larger SME clients?
Neil Patel (8 months ago)
What's your question?
Haneet Singh (8 months ago)
Sir, Google has changed the search Algorithms and my rankings goes down, Please make a video on it.
venkat SEO (8 months ago)
Check your keywords performances. Change content in your website page with new proper keywords. Tell me ur domine once
Haneet Singh (8 months ago)
Or tell me What to do now for increasing the traffic again?
Ceclia De Oliveira (8 months ago)
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.
Ceclia De Oliveira (8 months ago)
OK.. So, can we talk? :) maybe you or someone you know are interested in taking a little risk with me? I am totally committed and full of energy. I love the marketing/internet business.. So I think that is my turn to make it happen . Thank you ! :)
Neil Patel (8 months ago)
It's definitely possible. I have invested a lot in the Brazilian market because it has a lot of potential.
Bhagyesh Patel (8 months ago)
Nice one, Neil PATEL
Neil Patel (8 months ago)
Thanks!
Advert Lines (8 months ago)
Good video.
Neil Patel (8 months ago)
Thanks!
Matt Scofield (8 months ago)
Thanks as always, Neil! Just now getting to the point of considering taking on a small VC investment. This really helps!
Neil Patel (8 months ago)
I'm glad to hear it!
Rakesh Patil (8 months ago)
While watching, felt like a Rap song 😂
SAGAR AMRUTH (8 months ago)
Ya lol 😂
Chandan Kumar (8 months ago)
😂
Super High Kids (8 months ago)
Thank u
Neil Patel (8 months ago)
You're welcome!
Arshad Ali (8 months ago)
I need VC
Neil Patel (8 months ago)
You'll find one eventually
Karan Parwani (8 months ago)
Hey Neil, how to approach the VC's if the Idea is very common and existing but the industry and business model is profitable?
Karan Parwani (8 months ago)
Thank you Neil!
Neil Patel (8 months ago)
You have to set yourself apart from the competition in a very meaningful way.
Technical Karlos☑️ (8 months ago)
Hey legend please contact me🙏🙏🙏
Neil Patel (8 months ago)
Shoot me an email.

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