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With a few exceptions, many of the things bankers and venture capitalists look for in a company are very similar. When I stumbled upon Scott Maxwell’s article at Inc.com outlining the 6 Reasons a VC Will Turn You Down, it piqued my interest. I know Maxwell, founder and senior managing director of OpenView Venture Partners. I was working in one of their portfolio companies at the time I met him and found him to be a very smart and savvy guy.
If your not careful, it’s easy to lump business owners looking for a small business loan and their companies into a couple of really broad categories:
The fact of the matter is likely that there is some overlap as entrepreneurs who can work with equity investors and turn to debt financing for funding as well. Regardless of where you might fall or overlap in the above three categories, I think Maxwell’s list is a great representation of what a venture capitalist would be looking for and even relates to what a banker or other lender would be looking for too. Here’s his list along with my two cents:
Just like a lender, a VC is trying to balance risk and reward. Although the upside for a VC is likely far more than the interest earned by a lender writing a small business loan, if you’ve done your homework, have a healthy business, and reasonably good credit, you can present your desired small business loan as a relative low risk to your lender. Although Maxwell’s list is directed to entrepreneurs looking for equity financing, many of the deal-breakers he outlines will do the same at the bank. How do you and your small business stack up?
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Small business evangelist and veteran of over 30 years in the trenches of Main Street business, Ty makes small business financing and trends accessible in common sense language devoid of the jargon.
Blog
4 min read • Aug 11, 2022