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Qasim Mohammad is a Toronto-based venture capitalist and a member of the investment team at OMERS Ventures.

For many budding entrepreneurs, raising VC money can seem like a mysterious process that requires special skills or knowing something that most people don't. Fortunately, it's incredibly similar to an activity that most of us have undertaken or closely observed at some point in our lives: selling a home.

Selling a property consists of four key actions and behaviours that can also serve as the main components of a successful VC fundraising strategy. Here are the parallels, alongside relevant tips for entrepreneurs:

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#1: Make sure everything looks great, and resist the urge to lie Homeowners must keep their property pristine for potential buyers since a positive first impression can make or break a deal. Similarly, entrepreneurs need to ensure their company's business operations, organizational structure and finances are in order before heading out for the roadshow.

If something is broken and can't be easily fixed, don't try to hide it. In the spirit of making a positive impression, sometimes homeowners may be compelled to hide defects. But issues are rarely missed by buyers during the home inspection process. Like homeowners, entrepreneurs may also feel compelled to hide something about their company from investors that they think could compromise the fundraising process. But if investors find a hidden issue on their own while conducting due diligence, it's not as simple as them packing up and never coming back (as in the case of a misled homebuyer). The VC community is small, and any attempt at deceiving investors can spread like wildfire. If an entrepreneur's reputation takes a hit, then it becomes very difficult to compel other investors to consider their business in the future.

Tip for Entrepreneurs: Take care of any major business issues prior to fundraising. If that's not an option, be forthcoming about issues to investors. The key is to demonstrate flexibility in coming up with a solution that all parties will be satisfied with, so be honest and don't be afraid to ask for guidance.

#2: Pricing above the neighborhood average requires a good reason If a homeowner lives in a neighborhood where the average property sells for $1-million, they'll probably think twice about listing their home for $2-million. That's not to say the home isn't worth that much – it just means that it needs to stand out in some way above the rest to justify the higher price tag. Perhaps it's through more square footage, a pool, or a finished basement.

When raising VC money, it's important to keep in mind that there is a comparable for virtually every type of business. As such, when investors ask entrepreneurs questions about valuation, they expect to hear a response that corresponds with what they've seen for other similar types of businesses. If entrepreneurs come out swinging with a big number, then investors will ask entrepreneurs why they think their business is worth so much more than a comparable company operating in the same (or similar) industry. If an entrepreneur wants a big valuation, they need to be prepared to demonstrate why their company is worth it (i.e. through a best-in-class product, a unique business model, or some other highly defensible core competency).

Tip for Entrepreneurs: Asking for a high valuation isn't always in your best interest. If you end up getting it, you're expected to grow into it. And if you don't grow into it, that sets a negative tone for future rounds of fundraising where you may be raising capital at a lower valuation than the previous round (called a "down round"). The key is to not be greedy. Take what seems fair so you can get back to focusing on growing your business.

#3: A bidding war would be nice The dream for any homeowner is to have a bidding war over their property. This encourages buyers to outspend each other to secure the deal. The end result is often a selling price far greater than what was initially requested.

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It's not outside the realm of possibility for an entrepreneur to drum up a similar type of interest among multiple investors for a stake in their business. If the entrepreneur has done a good job of fostering positive relationships with potential investors prior to initiating the fundraising process and has built a strong business, then it's possible to play incoming investment offers against each other. The way this process is managed is more of an art than a science, and will lead to a successful outcome if the entrepreneur is in a position of power. And this power is obtained through establishing desirability for the business, and having a better alternative to a negotiated agreement than the individual investors vying for a stake in the company.

Tip for Entrepreneurs: Investors are people and are prone to envious desire – a.k.a. wanting something that others have. A good strategy for drumming up interest in your business among multiple parties is by first piquing the interest of a few reputable investors. This will legitimize the investment opportunity, and make other investors pay attention. After all, VCs like looking at companies that are being considered for an investment by other well-known investors that they wish to emulate. Needless to say, the prerequisite for such a strategy is to first establish personal relationships with VCs when you don't need their money.

#4: Staying in the market for too long can lead to a decline in value What happens to a house if it's sitting on the market for too long? It depreciates in value. The reason for this is rooted in the principles of the most basic economic model: supply vs. demand. When a homeowner is having trouble selling their property, it's because demand for the property is low. If the factors contributing to low demand remain unaddressed, then the consequent delay in being able to sell the property puts a negative impression among prospective buyers. Just like how people are prone to envious desire, they also become suspicious if it seems like they're being offered something others don't want.

Entrepreneurs must recognize that their companies can be subject to the same suspicions that people have for homes sitting on the market for too long. Whenever an entrepreneur enters the market for VC money, there is an inherent newness and shine to their business. Companies that have been fundraising for too long will start to be perceived among investors as having been shopped around because something is wrong with them. If this label is ascribed to a business, then the chances of an entrepreneur having a positive fundraising experience can be diminished – after all, the entrepreneur failed to recognize and quickly address the issues that were making it difficult to raise capital in the first place.

Tip for Entrepreneurs: Have a timeline ready before embarking on the fundraising process and stick to it – it usually doesn't take longer than a quarter for the relationships you've built among VCs to manifest into term sheets. If there are signs of the process not going as planned, recognize the issues and address them immediately. If the issues can't be resolved quickly, don't hesitate to halt the fundraising process and explore alternative forms of financing as a bridge to a second attempt at raising VC money (at a later date when conditions are more favourable). Debt is an excellent alternative source of financing when equity financing is out of reach.

If new entrepreneurs seeking capital stay on the lookout for these parallels between selling a home and raising VC money, they will bring themselves one step closer to a successful fundraise.

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