By Dr. Roshawnna Novellus, founder of EnrichHER.
Last year was a big year for venture capital. Venture capitalist firms raised over $40 billion to fund business ventures. This year is proving to be a different sort of animal: VC funds likely won’t be as plentiful as they were last year, and now we have the added difficulty of dealing with an unstable market. While it’s not impossible to get venture capital in an unstable market, it can certainly be challenging. What can you do to ensure you get the capital your startup needs while dealing with the added challenge of a volatile stock market?
Research the Market
Some entrepreneurial ventures are easier to fund than others. Study market trends to see what venture capitalists want to invest in right now. We’re currently in a very exciting time for technology-related fields. For instance, businesses based on creating or improving artificial intelligence will gain a lot of traction in the coming year, so venture capital funds are likely to go to these types of tech businesses than to businesses in less trendy markets.
Minimize Risks
With a volatile stock market, venture capitalists are less likely to take significant risks. How confident are you in your startup’s service or product? Is it something the world needs right now? If you can convince venture capital firms that your business is a sure thing — that the growth potential is massive, that your team is full of experienced leaders, and that you are already bringing in huge profits — then you’re well on your way to securing funding in an unpredictable market.
Dominate the Market
Along those same lines, demonstrating product-market fit will not only reduce risks but will also help your business succeed. Product-market fit is especially vital when you’re up against an unstable stock market. You’re more likely to get the funding you need if your product is highly desired — or better yet, needed — in the current market. The popularity of your product matters just as much as the quality of the product itself. Is your product or service something that customers need, or is it something that they might just want?
Demonstrate Profits
If your startup is already garnering a profit, VCs will likely be more interested in funding your business. Again, it’s all about minimizing risks: In a nation with a volatile stock market, venture capitalists can’t afford to take unnecessary chances. Walk into the pitch meeting with numbers on your side, and you’ll be more likely to get the funding you need.
Adopt a Realist Attitude
Somewhere between naïve optimism and unrelenting pessimism, there lies a different kind of person: a realist. These are the people who accept situations as they are and then adapt to deal with ever-changing circumstances. I used to watch Winnie the Pooh cartoons when I was a child, and even at a young age, I noticed the stark contrast between Tigger, the eternal optimist, and Eeyore, the pessimistic donkey. Neither Tigger nor Eeyore seemed to get much done because their attitudes got in the way. So, instead of Tiggering through life (bouncing up and down, denying the possibility of failure) or acting like Eeyore (expecting the worst and thinking all your efforts are doomed), find the middle ground.
Maintaining an attitude of adaptability will ensure your business grows with the times. When you seek funding during a volatile stock market, make sure that your business will survive and thrive in the current entrepreneurial market, do everything you can to minimize risks, build a strong team of experienced leaders, and then prepare to adapt when faced with unexpected roadblocks.
Dr. Roshawnna Novellus is the founder of EnrichHER, host of Startup Funding, and serves on the commission on Women for Atlanta.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.