Show me the money: How to get VC funding

Posted on 15 Jul 2008 at 16:51

So you've got a brilliant idea for a website, but where do you turn for advice and funding? "The best UK venture capital funds to approach with a billion-dollar idea are Doughty Hanson, Index, Accel and Balderton," advised Tom Ilube, currently CEO of internet-privacy specialists Garlik but formerly chief information officer at Egg.com. "Each of these firms have large funds but are also able to get involved right from the start with partners who can see the big picture."

Before you start talking to the venture capitalists, however, you need to get enough seed capital to build your website and get into the market. Then you're in a position to talk to the VCs and sell your big idea - but don't be too disheartened if your pitch doesn't immediately open the chequebooks. "Bear in mind that the hit rate is about 50:1," Ilube warned. "To be realistic you should expect to have 50 initial conversations with investors, resulting in five serious pitches and ending up with one or two investors." And maintaining your confidence amid the knockbacks is vital. "You just need to believe in your idea and keep pitching and taking feedback until you've got the pitch that really works," Ilube added.

But while you're waiting for a VC to bite, isn't there a danger some other bright spark will happen across your website and steal your money-spinner for themselves? Michael Wilson, CEO of virtual world There.com, isn't convinced. "The distance between a billion-dollar idea and a billion-dollar business is enormous," he said. "I think the number of times an idea has been genuinely stolen and executed by another party is actually pretty rare. Instead there are lots of cases where another party took an idea to the next level, but very few where they just executed the same idea and were successful."

In fact, Wilson reckons that focusing on the money instead of the idea is half the problem. "If you get up every day worrying about your exit strategy, you're in the wrong business. If you get up every day and worry about your customer, then you're getting somewhere," he said. Ilube agrees that you shouldn't worry too much about idea theft. "In general it is execution that counts. If you are the type of entrepreneur who can get things done then just get on with it and don't worry about the type of entrepreneur who goes around stealing other people's ideas, they will never be able to compete with you."

However, Leigh Himel, VP of strategy with the Blast Radius web developer that has built sites for Nike and Vodafone, warns that even great ideas fail. "Maybe it was too early to market, maybe too late. Maybe someone else executed it better or had better marketing. Being the best doesn't mean success, so a little luck can never hurt." Be lucky, dear reader, be lucky...

Author: Davey Winder