The Great Finding a venture capital firm
There are thousands of venture capital firms in the US alone, and chasing the wrong firms is one of the most common reasons companies fail to raise the capital they need.
When searching for a venture capital firm, there are six main variables to consider: location, sector preference, stage preference, partners, province and assets.
Many projects face the difficult task of raising investment capital. The first part of this process is finding the right venture capital (VC) firm. Although this may seem simple, it is not. There are thousands of venture capital firms in the US alone, and chasing the wrong firms is one of the most common reasons companies fail to raise the capital they need.
When searching for a venture capital firm, there are six main variables to consider: location, sector preference, stage preference, partners, province and assets.
Location: Most venture capital firms invest within only 100 miles of their offices. By investing closer to home, companies can participate more actively and add value to their portfolio companies.
Sector Preference: Many venture capital firms focus on specific sectors such as healthcare, information technology (IT), wireless technologies, etc. You will miss the opportunity.
Phase Preference: Venture capital tends to be focused on different stages of projects. For example, some venture capital firms prefer early stage projects where the risk is high as well as the potential return. Conversely, some venture capitalists focus on raising capital for companies to fill capital gaps before they go public.
Partners: Venture capital firms consist of individual partners. These partners make investment decisions and usually have a seat on the board of each portfolio company. Partners tend to invest in what they know, so finding a partner who has previous business experience in your field is very beneficial. This relevant experience allows them to fully understand your project's value proposition and gives them confidence in their ability to add value, encouraging them to invest.
Portfolio: Just as you should look for venture capital firms whose partners have experience in your field, the ideal venture capital firm also has portfolio firms in your field. Being experts in the industry, the management of an investment portfolio company often advises on whether the company in question is worthwhile. In addition, if your project has potential synergies with a portfolio company, this greatly increases the interest of bold investors in your company.
Assets: Most first-time venture capital firms require follow-on capital rounds. As such, it is beneficial for the VC to have "deep pockets", i.e. enough money to participate in the follow-on rounds. This will save the company considerable time and effort in maintaining sufficient liquidity.
Finding the right venture capital firm is critical for businesses seeking venture capital. Success results in the necessary capital and significant help to grow your business. On the contrary, the inability to find the right company often results in no capital being raised at all and the company not being able to grow.
Portfolio: Just as you should look for venture capital firms whose partners have experience in your field, the ideal venture capital firm also has portfolio firms in your field. Assets: Most first-time venture capital firms require follow-on capital rounds. Finding the right venture capital firm is critical for businesses seeking venture capital.
