1. VC firms usually seek out investment opportunities in growing markets such as information technology (IT) or biotechnology. In exchange for a cash infusion, the start-up gives the VC firm a significant share of company equity.

2. As technological innovation has skyrocketed, the cost of starting a new company has fallen considerably, e.g. cloud computing has slashed the cost of storage. today it can cost less than $5,000 to launch a beta version of a website or mobile app.

3. The reality is some 60% of start-ups backed by venture capitalists, however, go bankrupt before the start-up can pay back the investment. Just one out of ten venture capital investments turn out to be successful.

4. A venture capital firm is usually structured as a limited partnership. Most investment capital comes from limited partners (LPs) while the fund’s general partners (GPs) invest that capital in various projects on a limited partner’s behalf. Typically, if a GP raises a total of $100 million from limited partners for a particular project, the GP would probably throw in an additional $1 million to $5 million as a sign of the VC firm’s confidence in the project.

5. VC firms make profitable exit when a funded start-up is either sold or goes public. A venture capital group will aim to pay back its investors a decent margin on their initial investments. The VC firm would like to earn some money itself if possible, usually around 20% of the final sale or public valuation.

6. A venture capital firm pays for its expenses by retaining a management fee on the whole amount of its original investment, to the tune of about 2% annually.

7. Angel investors are individuals who personally invest in companies to help them grow. When you are first starting out, find an angel investor. Angel investments provide needed financial support without demanding much in return. This stands in start contrast to venture capitalists, who usually demand enough shares in a start-up to allow them to influence company decision-making.

8. Crucially, an investment from an angel can also provide lucrative networking opportunities, putting a start-up in a better position to secure further funding from a venture capital group. Angel investors usually invest from $500,000 to $1 million in a single project, just enough capital to push a start-up through its first year.

9. Venture capitalists look for start-ups with strong, well-balanced management teams. It’s management, management, management. A start-up’s success depends on having a flexible yet skilled management team. It doesn’t matter if the start-up has a great business plan. That’s why VC firms rarely invest in ideas alone. It’s a much safer bet to invest in a great team.

10. A successful company often springs from the combination of a visionary leader with a global perspective, a technician with the skills to turn the vision into reality, and a salesperson who can tailor a product to market expectations.

11. Don’t pour too much money into marketing early on.If you’ve done your job well, you shouldn’t have to spend a lot of time or effort explaining your product- your product should speak for itself. Facebook, Uber and Paypal have never spent a lot on advertising. Instead, these companies focused resources on building value in to their products.

12. True innovation is found when your start-up can identify a need that the market doesn’t even realise yet. Most people didn’t know what they wanted until it was shown to them. market research will only get you so far; your idea needs to address not what people think they want today but anticipate what they’ll need tomorrow.

13. You also need a plan for getting your concept to the right customers. Venture capitalists want to know how a start-up intends to build a community around a product or service.

14. Your product has to have some viral potential. You can’t make it viral after it’s already on the market.

15. As an entrepreneur, you have to show potential investors that you’re aware of their goals by presenting a good exit strategy. You need to be aware of the ways potential buyers will view your start-up. The biggest deals are made when a buyer sees a target company as a strategic asset.

16. As you put together an exit strategy, remember that the best deals probably won’t come from number-crunching financiers. Emotional buyers, or those who have an urgent need to incorporate your company into their business, are the buyers you want. An emotional buyer might be an established company loaning market share, for instance. If your start-up offers a chance for the company to stave off decline, they’ll buy no matter the price.

17. And if you’re already on your way out of the market, an additional round of venture capital funding could help you better negotiate a sale. Twitter, for example, was interested in purchasing Instagram when negotiations began to stall. In response, Instagram raised additional funds, which boosted the company’s overall market valuation. This inspired Twitter to finally make an offer. Sometimes investors are reluctant to buy a company until competitors show interest in doing the same. Your competition could help you seal better exit deals, so use this strategy to your advantage.

18. When presenting to potential investors, make it snappy, don’t do lengthy presentations. Be clear about your start-up’s financial requirements, the talents of your management team, your current stage of development and future goals. Your business plan’s executive summary-just one or two pages, should cover these key topics.

19. Once you are in the door, you can offer other supporting documents, such as the so-called investor slide deck. This is a set of ten slides that address your start-up’s most important issues, such as your competition or company value proposition.

You also need to have a financial model to illustrate the viability of your product. Your model should offer three to five years’ worth of financial data, covering issues such as forecasted revenue, major costs and net results.

20. A good model will accurately descend the factors that will determine your company’s profitability. Do the details!