It’s best that you know if your company qualifies, so you aren’t wasting time.

A lot of people start businesses, but they are not all ripe for venture capital investment.

According to the Small Business Administration, about 600,000 new businesses are started in the U.S. each year, and given the datasets from the MoneyTree report, only 4,561 received venture capital investments in 2016.

Are You a Unicorn?

First things first, if you are looking for venture capital investment in the tech community, you need to be going after a BIG idea. Why? Because VC wants to make lots of money. A 2x return, what’s that? No, they want to see the 10x return, the unicorn, that comes galloping toward them with its horn held high.

So, let’s say you are poised to make the next Snapchat. OK. Here comes another ingredient. You need to have a unique idea with a high barrier to entry. What does that mean? It means that if you don’t, Instagram can come and knock you right off. Whoopsies. You get the point. Do you have a specific patent, a trademark, is there some type of intellectual property that is difficult to copy, what makes your product difficult to replicate?

Read the rest of the story on Black Enterprise here.

BLACK ENTERPRISE is the premier business, investing, and wealth-building resource for African Americans. Since 1970, BLACK ENTERPRISE has provided essential business information and advice to professionals, corporate executives, entrepreneurs, and decision makers.