Venture Capital is a form of investment whereby money is given to a company in order to start-up, expand, or complete an acquisition. Venture Capital firms, groups and individuals provide this money in exchange for equity in the company.

Have a Product

If your company is based around a website or the Internet in general, it is important to have a tangible product. The first successful online business model was based around advertising. Basically, the more people who saw your website, the more advertisers would pay you to display your ads. Today, this user advertising model is exceptionally hard to prove to investors. Having a tangible product to sell is important. While your product doesn't necessarily have to be physical, you will have a much easier time finding funding if you can show real sales forecasts and revenue that does not rely on website advertising.

Refine and Explain Your Product

Before seeking investment, it is important to have a strong product or service that is clearly explained. You should carefully and critically review your company and make positive changes before seeking investment. Explaining your business clearly with a business plan will give potential investors a clear view of what your company can do and the profit that can be made by investing.

It is very important to be able to clearly explain your company both in detail and in a short (30 second) elevator pitch. You'll need to be able to summarize exactly what your company does, how it does it and how you make money. You'll need to be confidant, excited and have a deep personal investment in your company for your pitch to be successful.

Many people start this process by creating a video. Using a webcam, it is easy to record your pitch, listen to it, share it with friends for feedback and even share it online for public feedback.

Assemble a list of possible investors. Don't leave out family, friends, colleagues, current and former employers, etc.

Looking online is a great place to find investors, many of them maintain blogs and take their online personas very seriously. Your goal is to "get on their radar". Connect with people who have invested in similar companies by leaving regular intelligent comments in their blog and other online activities. "Run into them" at industry events but open a discussion rather than ask for money. Generally, you want to become an active and smart contributor without becoming a stalker, needy or creepy.

If this is your first company and you require a large (over $50,000) amount of capital, it is worth considering partnering with someone who has successfully raised money and ran a company in the past. This partner will likely already know several investors, know how to adjust your business plan (and processes) to become attractive to investors and know what to say when being evaluated for vesting.

After you are "on the radar" of a potential investor, a good way to meet is by asking for help. Asking a potential investor for their help to refine your business plan, discuss how you could improve a current process, or other relevant (and interesting) question is a good way to informally pitch your business to an investor.

If possible, try to arrange a brief in person meeting with the investor to discuss your question. Carefully approach your question and your desire for funding. If your request for funding is dismissed, ask the investor for references of other people who he or she thinks might be interested in your idea. Keep in mind that investors are typically busy people who value their time. You need to make yourself available at their convenience and sometimes even be willing to travel for the opportunity to meet with them.

Alternatively, there are several annual events that attract a large number of people and firms that are looking to invest money. One such event is the Techcrunch50 held in San Francisco. Attending or participating in one of these events can be an easy way to connect with potential investors.

1. What exactly are you selling?
2. What is your profit margin?
3. How much money are you loosing out on by not receiving an investment?
4. In what ways is your product different from each of your competitors?
5. Do you have any patents or propitiatory technologies that belong to this company?
6. What exactly will you do with the money? Why do you need it and what's your plan?
7. What is your marketing strategy? Exactly how are you going to increase your user base and what are you going to sell them?