Capital Raising Strategy: Why Your Website is Crucial

We had interviewed around 300 Venture Capital Investment Managers in 2009, and we asked them the same question ” What is the first thing you look at when someone sends you a deal”?

Surprisingly, the answer is completely different than when we asked the question around 5 years ago.

Venture Capital Investment Managers, just like everyone else, look at company’s website as the first step, if you have a lousy website, or worse, you tell them that due to the funding shortage, you have launched the company website yet, it will leave bad marks.

We are not talking about developing a website that costs tens of thousands of dollars, but at least have an introductory website to make the business looks serious ‘” venture capital investment managers have perceptions that, if you are even unable to start a website properly, how can you manage a business.

One Venture Capital Investment Manager told us why reviewing a website is important from their perspective:

· Your website demonstrates your project management skill, he said, if you are unable to develop a simple website, that will be reflected on your weakness in project management

· Website is a communications strategy, and therefore, assessing your website is part of VC’s overall Marketing Strategy assessment, which is often part of the due diligence

For start-up companies, you just need a simple and effective website, perhaps 5 to 6 pages with simple contents. But for start-ups, a large section should be dedicated to the Team Page, where

You should also use your website to generate as much interest as possible, here are several little tricks that can add value to your company:

1. Have a trial / download version of your product from your website if applicable

2. Have a section where users can register their information with you

For many companies, they failed to recognize the value of members and trial users ‘” from venture capital’s perspective, however, these are real added values, and the more information you have, the more value you are creating for your business, even without the actual revenue from them.

Let me go through a number of examples what companies have done successfully through website registration.

The most widely known example is the Hotmail, which was eventually taken over by Microsoft, eventually, what the company really had was the 500 million e-mail addresses and their profiles, a super-platform for any advertiser.

I do not need to go into details that the similar model was then established by the hundreds of Social Media websites around the world, and look at the popularity.

But the same tricks are equally effective to many other businesses.

1. Mining company raise $2 million from its own database of investors ‘” this is the best ROI I have ever heard in terms of capital raising. I was advising to a mining company in Australia at the time, and helped them to utilize their database over 2 years to send out newsletters and collect information from investors interested in their company. This database gradually increased to 3,400 and formed a solid foundation for capital raising activities. The company did a mail-out inviting them to subscribe to a new IPO and raised $2 million from one mail-out.

2. Telecommunications Group, one of our clients runs a phone card company, it is not an industry you would think that will have very high barrier of entry, the profit margin is negligible. However, through the phone card company, they have built an extensive database of clients ‘” all through online registration, this eventually grew to 200,000, and based on this database, they created a survey company, which attracted attention from venture capital firm immediately which subsequently injected $5 million into the business.

Therefore, if you have a website for your business already, come up strategies to improve the functionalities that allows you to understand who are looking at your websites, this will really impress your potential funding partners.