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If you're an Australian start-up or early stage business seeking venture capital, you can approach government sources or private sector funds.

Knowing the following will help you succeed:

  • where to source the most suitable funds
  • how to approach fund managers
  • understanding their expectations

The steps on this page provide an overview on how to go about sourcing venture capital.

1. Be prepared

It is important to be well prepared before applying for venture capital. A capital provider will want to know why your proposal deserves support. If there is a genuine interest in moving forward you must be ready for the fund manager or government funding body to undertake due diligence on you, your organisation and any technology.

This is usually a serious and time consuming exercise. “Under promise and over deliver” to prospective investors and only make assertions or representations that you can support. 

Before contacting a fund manager or government funding body, think about who it is. Find out what the fund specialises in and understand what investments it has made and why.

It helps if you're introduced or referred. 

Prepare well before your meeting by researching your audience. Be clear about the problem you are solving and value of your idea.

Ask yourself why you are pitching and what your desired outcomes are. Also ask yourself who you are pitching to - are they the most appropriate people? This will help you develop the strongest key messages and work out the best presentation.

The fund manager or government group may want you to:

  • explain the unique benefits of your idea and any associated technology
  • have a robust and credible business model
  • describe the strengths and weaknesses of your team
  • provide customer and competitor analyses
  • define the intellectual property strategy

You need to consider:

  • the amount of capital you require
  • what you will use the capital for
  • what you expect to achieve
  • what your vision is for the next 5 to 7 years

Ensure that you define the problem in terms the audience will understand. You must:

  • quantify the problem you're solving (do the maths)
  • explore the impact on the end user's business and on others in the value chain
  • describe how your solution will be compelling to the end user, using commercial terms that are relevant to the audience

2. Create a toolbox

In your toolbox you should include dynamic documents you can update and change as you learn more in the market place. They should cover compliance, intellectual property and legal issues.

You should create:

  • a 60 to 90 second elevator pitch
  • a sales pitch targeted toward prospective customers
  • an awareness pitch for a broader audience
  • a concise one page description, including the value of your idea and customer references
  • follow-up documents
  • a business plan, a proposal, a fact sheet and specifications

3. Understand your target audience

While preparing, ask yourself the following:

  • Who are you pitching to?
  • Why should they care?
  • Will they see you and your team as having the legitimacy to execute?
  • How does their decision-making process work?
  • How will you progress the discussion?

Pitching is about telling your story and starting a conversation. Your main goal should be to continue that conversation towards a positive outcome. Create a 'feedback loop' by asking questions. Don't let your material drive the discussion.

The Australian Investment Council

The Australian Investment Council also provides information and guidance for entrepreneurs seeking investment from private investors. They also provide relevant transaction document templates for you to use.

4. Sources of venture capital

If you are seeking venture capital, you can learn about the different programs and contact the funds registered or licensed under those programs.

The Venture Capital Limited Partnerships (VCLP) program provides tax benefits and support to the venture capital sector.

The Early Stage Venture Capital Limited Partnerships (ESVCLP) program provides tax benefits for both fund managers and investors.

The Australian Venture Capital Fund of Funds facilitates investments in registered ESVCLP and VCLP funds.

Pooled Development Funds facilitates equity investments in small-to-medium sized enterprises (SMEs) to increase capital.

The Biomedical Translation Fund helps fund managers to develop and commercialise biomedical discoveries.