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What 4 factors attract venture capital for startups?

Starting a business in Colorado can be a very exciting experience for eager entrepreneurs. However, this is not to say that it is ever an easy or straightforward process. There are a number of challenges that a business owner will face throughout the life of the business, but one of the first obstacles that many people arrive at is securing venture capital

Startup companies often require venture capital to get a business off the ground. This financing can be crucial for high-risk companies that have a high potential for growth but are at a very early stage and need help getting started. According to a column in Mashable, there are four things that a business owner can do to attract venture capital funding.

First, business owners in Colorado should have a fresh and creative idea that cannot be easily copied and reproduced to attract funding. If a product or service is not distinct, it could have trouble growing and being profitable. Unique ideas or services can be trademarked or patented which can add further value to a business.

Startup business owners should be very knowledgeable in their expectations and understanding of their intended market. Venture capitalists want to know not only what makes an idea or service different, but how it fits into the current market and what needs are met by the business. 

Venture capitalists also benefit from seeing market traction for a startup. Entrepreneurs can demonstrate this by launching a beta or pilot program and show how these programs translated into actual clients or users. If early adopters latch on to a new business, it proves that the product or service has enough traction to generate and maintain interest.

There is certainly no guarantee that a business or product will be successful. But this is where the last characteristic of an attractive startup comes in, according to the article. Having the right team in place to deal with challenges, spur innovations and create solutions for a business is a major benefit to any startup. 

With these four factors in place, a business can be a much more attractive option for venture capitalists looking to invest.

Source: Mashable, "4 Things Your Startup Needs to Attract Venture Capital," Elisha Hartwig, May 7, 2013

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