Most of the information here applies to US funders, but I cannot imagine that South African VCs are going to be much different. As I get to know more of them personally, I will adapt this post as necessary.

Below is a step by step process, adapted largely from posts by Dan Dodge and Rick Segal. Although every VC firm will have its own approach to deal-making, I think this is a pretty good guide for what you can expect.

Your goal is to get a first meeting with a funder. There are various ways to introduce yourself, but the phone, email or person-to-person meeting work well. Prepare the “elevator pitch” which is a 30 second introduction to your company. This pitch should:

• Be easy to understand
• Get the potential funder excited by its potential
• Identify a preferably known need or market, and offer a simple solution
• If applicable, it should mention similar companies who operate in the space.

Be prepared to send an executive summary by email, if requested.

In the first meeting, when “the meter starts running”, as Rick Segal puts it, you should explain

• What problems you solve
• Who is your market/ customer
• How you will collect revenue
• Your competitors, and how they fit in with your plan
• Your management team

Rick Segal also suggests creating an Investor FAQ, which should answer the following questions:

• Are you the founder
• How many founders are still in the company
• How many full time employees
• Do you have revenue today?
• How much money has gone into the company to date?
• What is the capital structure of the company?
• What do you think the total investment required to generate revenue?
• What are the key milestones you willuse to measure the company’s success/progress?
• What keeps you up at night?
• What factors outside your control will have to be in place in order for this business to be successful?

Do not go into detailed explanation of how your technology works, but make it clear that it does work. For instance:
“We list South Africa’s best blog content in one place” works far better than
“ We ask people to register their blogs with our service, and then we crawl their websites and aggregate the best blogs together with the public vote”.

After the meeting, the VCs will have “The Huddle” which is when all the partners get together to decide if the deal should be vetoed (rejected) right from the start.

Assuming you get this far, the VCs will then start to ask for more information, which you should provide as soon as possible, with full accuracy and no hype.

If all goes well, the VCs will provide you with Term Sheets, which is basically an outline of the deal. Now is the time to get a lawyer, and make sure you understand every little thing. Don Dodge suggest you think up three scenarios, and apply them to the term sheets to see what would happen in each case. This will give you a clearer understanding of what you are agreeing to. Your deal is not final yet, but it is heading in the right direction.

Now is the time for due diligence, which is a serious investigation of your company, the team, the technology and the competition.

If all goes well, the result will be a lot of lawyer meetings, and a signed deal.