What a VC wants to see in you
Here is how you too can woo even the fussiest venture capitalists.

SAN FRANCISCO (Business 2.0 Magazine) - Most venture capitalists will tell you that they invest in people, not business plans. They like experienced entrepreneurs they've worked with before. With luck, you've got one of those people on your team, preferably as CEO. But if you're not a veteran and can't find one, don't fret.

A common misstep is to pitch the wrong partner at a VC firm -- that will get your business plan nixed immediately. Find the partner whose expertise aligns with your business and send that person your well-honed executive summary. (Save the full-blown plan for later.)

Quiz
Will VCs back your business?
Getting a piece of the $22 billion venture-capital pie for your business requires that you meet VCs' stringent standards. See if you come close.

1. I've done extensive research (online, in trade publications, etc.) to see which venture-capital funds invest in which kinds of companies and what's in their portfolios now.
True
False

If you get a meeting, highlight your experience and what differentiates your startup from others, but keep your ego in check. In such a close-knit business relationship, VCs much prefer to work with people they get along with easily.

In an early-stage round, VCs will want 40 percent of the company in return for their investment. VC term sheets are notoriously demanding, but the place where entrepreneurs can suffer most is in the liquidation preferences. In essence, liquidation preferences determine how money gets divvied up if your company is sold.

Your VCs are entitled to protect their downside, of course, but not to the exclusion of common stockholders -- management and employees -- who also want their equity to be worth something. Proceed with caution.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.