Starting a business requires capital, which can be obtained from a variety of sources. A business owner may ask friends and family for money, take out a loan, or pitch a venture capital firm. Venture capital (VC) is financing where investors provide startup companies and small businesses with funding. The recipients are viewed as having long-term growth potential for the investors to see a positive return.

If you are considering seeking funding through venture capital, here is what you can expect during the process.

Research Firms

You will want to narrow down your prospect list by finding VCs investing in your niche. Look for firms that are actively funding and not idle.

Network

Once you have found VCs interested in your business model, network with other founders to introduce you to them. If their business has been profitable for a specific firm, they are in an excellent position to connect you. A solid introduction can increase your chances of getting funding.

Introductory Phone Call

If a VC is interested in hearing more about your business, you can expect an exploratory phone call. Speaking with a partner or someone higher up at the firm can expedite the process. If the call goes well, they will ask you to send them a pitch deck.

In-Person Meeting

After reviewing your pitch deck, a VC firm may ask you to come in for a face-to-face meeting. You will want to have solid answers for questions they ask, so preparation is key. You may present to several partners all at once during this stage or be asked to come back for additional presentations. If everyone feels comfortable moving forward, you will receive a term sheet.

Due Diligence

If the VC firm does not find any issues, all official paperwork can be signed to close the deal. The due diligence process can take several months, so remain patient.

Once a VC is invested, it will remain involved with your business. Typically, the firm will have between 15% to 45% equity in your company. Most VCs want to sell their stake in your company within ten years.

Startups are a risky place to invest. If you can offer a strong return for VCs, you are more likely to receive funding. Remain persistent if VC seems like the appropriate path for your business. Use each pitch as an opportunity to improve for the next one. Getting a startup off the ground can be a challenging but rewarding accomplishment.