One of the biggest factors in how successful you will be raising early-stage money from a VC is what market your company addresses. VCs want a BIG market, but also an UNTAPPED market - a billion dollar opportunity that NOBODY else is aware exists. Of course, no such markets exist. The trick to a VC picking a market is finding a market that is small enough right now that there aren't a lot of people in it, but that is about to explode in growth so that their company will generate tens and tens of millions of dollars in revenue within a few years. The problem is that as soon as market starts to pick up steam, it becomes a HOT VC investment area, at which point there are 500 companies all seeking VC funding with almost identical business plans, and you have a hard time getting differentiated from all that noise.
When you are starting a company, figure out what part of the market curve you are in. Are you starting a company in a NON-EXISTENT market that you believe is about to explode, are you the 3rd, 4th, 10th company to raise VC in a market that is already on the up-tick, or are you trying to be something different in an already over-invested market. Depending on where you are will help to refine your strategy for talking about the market. I have been raising money in all three of those categories. It is funny that you can never really win an argument with the VC on the market. You will immediately go from the VCs telling you that this is not a BIG market opportunity, to them telling you this space is over-invested in and too noisy.
The ideal situation for you to be in for raising VC is to have been in 'stealth' mode for a while (if you've been out consulting for a while that is a perfect opportunity to have been 'secretly developing your technology') building your product so that by the time you talk to them you are FAR ahead technology-wise of 1 or 2 competitors who are also early-stage, recently funded companies with a little but not much market traction (from big name VCs that make the VC you are talking to stand up and take notice). Although you are unlikely to ACTUALLY be in this ideal scenario, I would aim in my presentation to present yourself in that mindset.
When top-tier VC invest in a deal all the other top-tier and mid-tier VC get shut out of the deal and if you can present them an option that looks in some ways BETTER (so like better technology but maybe you don't have the same executive management or relationships as that other company) you may make them very happy. On the flip side, if you are in a market where the VC has already PASSED on 10 of your nearest competitiors, you are going to have a hard time.
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