If you’re looking for business financing, don’t limit your search to the continental United States. Substantial venture capital and private equity money exists overseas, and it might be the answer to your funding needs. Many venture firms think globally, searching for the best companies to invest in worldwide, not just within their own borders.
Overseas venture capital primarily comes from Europe, particularly the United Kingdom. The overall size of the European venture capital community is much smaller than the venture scene in the United States. The European Private Equity and Venture Capital Association estimates its VCs invest about one-fifth as much money as American VC firms. But it’s worth taking a look at foreign VC sources.
The following are some strategies for finding overseas VC money:
- Think tech: The vast majority of companies European VCs invest in are in technology. One of the biggest areas of interest is clean tech/green tech: companies with innovative products or services that help reduce pollution, increase energy efficiency, or generate energy in less polluting ways. Other technology sectors, such as biotech, software, hardware, and wireless, also attract attention. Be ready to make the case for why your technology is groundbreaking.
- Network, network, network: If you don’t know any European venture capitalists and don’t have the money to jet across the ocean to meet them, try networking at home with local VCs. Often they know their counterparts abroad, particularly in the sectors they invest in most. Go to business networking events to learn more about the players in your local venture capital scene. If you can get a local firm or two on your side, they may help you connect with firms abroad.
- Find a local office: Increasingly, many venture capital firms have satellite offices around the world because they seek good business investments wherever they might be. Research local venture capital groups and associations to see if European firms have opened a local office or perhaps have a representative in your town. Some overseas firms also have alliances or partnerships with VCs based in the United States. Identify these and you can approach their local partners to gain access to foreign VC firms.
- Be a joiner: Join your local industry associations and attend their events. International venture capital firms may turn up to check out companies.
- Develop an overseas angle: In many cases, overseas VC firms want to invest in companies that are either doing business in their region or contemplating market entry there. When possible, they want to partner with companies that can benefit from their expertise in local markets. Make that connection for investors. Even sourcing product from an overseas market where you are searching for investors could put you in touch with the local financing scene.
As with U.S. venture capital firms, be sure to prepare a rock-solid pitch for overseas VC firms. Be ready to answer tough questions about differentiation from competitors, the profitability of your business model, and your growth prospects.
Business reporter Carol Tice contributes to several national and regional business publications.