Finding a Venture Capital Firm

Many ventures are faced with the challenging task of raising venture capital. The first part of this process is finding the right venture capital firm (VC). While this may seem simple, it isn't. There are thousands of venture capital firms in the United States alone, and going after the wrong ones is one of the most common reasons why companies fail to raise the capital they need.

When seeking a venture capital firm, there are six key variables to consider: location, sector preference, stage preference, partners, portfolio and assets.

Location: most venture capital firms only invest within 100 miles of their office(s). By investing close to home, the firms are able to more actively get involved with 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. In most cases, even if you have a great company, if you fall outside of the VC's sector preference, they'll pass on the opportunity.

Stage preference: VCs tend to focus on different stages of ventures. For instance, some VCs prefer early stage ventures where the risk is great, but so are the potential returns. Conversely, some VCs focus on providing capital to firms to bridge capital gaps before they go public.

Partners: Venture capital firms are comprised of individual partners. These partners make investment decisions and typically take a seat on each portfolio company's Board. Partners tend to invest in what they know, so finding a partner that has past work experience in your industry is very helpful. This relevant experience allows them to more fully understand your venture's value proposition and gives them confidence that they can add value, thus encouraging them to invest.

Portfolio: Just as you should seek venture capital firms whose partners have experience in your industry, the ideal venture capital firm has portfolio companies in your field as well. Portfolio company management, since they are industry experts, often advises VCs as to whether the company in question is worthwhile. In addition, if your venture has potential synergies with a portfolio company, this significantly enhances the VCs interest in your firm.

Assets: Most companies seeking venture capital for the first time will require subsequent rounds of capital. As such, it is helpful if the VC has "deep pockets," that is, enough cash to participate in follow-on rounds. This will save the company significant time and effort in maintaining an adequate cash balance.

Finding the right venture capital firm is absolutely critical to companies seeking venture capital. Success results in the capital required and significant assistance in growing your venture. Conversely, failing to find the right firm often results in raising no capital at all and being unable to grow the venture.

As President of Growthink Business Plans, Dave Lavinsky has helped the company become one of the premier business plan development firms. Since its inception, Growthink has developed over 200 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share.

In The News:


pen paper and inkwell


cat break through


You Are Invited

Business card size works well for invitations to special events.What... Read More

Explode Your Consulting Income

Here are just a few ways to increase and diversify... Read More

9 Things You Must Do To Maximize Your Chances Of Obtaining A Small Business Loan

To get approval for your small business loan application, you... Read More

Top Ten Blunders Business Owners Make

In today's marketplace the words 'job security' have become an... Read More

Will Adding a Car Wash to Your Fast Lube Add Additional Crime to Your Facilities?

Car Wash Crime in the Hood. Apparently not everyone is... Read More

7 Advantages to Incorporating

There's no question that hard work and a little luck... Read More

Banking and Company Credit Card Policies for Small Business

Does your small business have a banking and credit card... Read More

Business Development Is Not An Event

Cash flow. To stay in business, you've got to keep... Read More

Pressure Washing Heavy Equipment

One of the best ways to make money in the... Read More

Becoming Recession Proof

A lot of business owners I've spoken with lately have... Read More

There Are No Dumb Business Questions, Not!

Q: I'm curious. What is the dumbest business question you've... Read More

Data Loss - Can Your Company Survive? (Most Do Not)

Data. Most people think it is a term relegated to... Read More

Taking Stock

Back when I owned an inventory-based business, one of my... Read More

Do You Own Your Business Or Does It Own You?

What was your aim when you went into business for... Read More

Is Your Small Business Name Important?

You bet a name is important. Many small business owners... Read More

But This Is Just My Opinion

Hi, Charles...here, Your Cap and t-shirt guy From Texas. How... Read More

From Birth to Death

Your product is dying. With the same inevitability that we... Read More

Make Your Business More Profitable

More sales and more profit. Isn't that what you want... Read More

Why Internet Shopping is the New Mall of the Future

Last year, trillions of dollars transferred hands on the internet... Read More

Get Approved for a Franchise

Deciding to start your own franchise is just one of... Read More

The Key To Success - Choose The Right Partners

Do you promote yourself as offering prompt, reliable and quality... Read More

6 of 1, Half Dozen of the Other

Motivational author and speaker Jim Rohn says that for a... Read More

How to Write a Credit Policy for Your Business

The book, "Become the Squeaky Wheel," by New Hampshire author... Read More

Small Business Failures in America - Cash Flow Issues

We are noticing an increase in the length of time... Read More

Building A Business That Works For You

Before you want to build your business, you need to... Read More

Is Brick and Mortar A Passing Fad?

Q: Is the online world the best place to sell... Read More

Low Cost or Highly Funded Start Up

Many new ventures are preoccupied with all the money they... Read More

Going Public by Way of Regulation D (504) Offering

Under the Securities Act of 1933, any offer to sell... Read More

QSR Quick Service - Fast Food Restaurants Labor Situation in United States

One of the major complaints in the QSR Quick Service-Fast... Read More

Keeping your Business Alive

As long as you eat and breathe you will stay... Read More

Small Business Pricing Strategies

TACTIC #1 -- Never simply slash your prices, unless you're... Read More

How to Sponsor an Event for Fun and PROFIT

How do you sponsor an event and get personal introductions... Read More

Auto Detailers and Competitive Aspects of Automobile Detailing

There are both fixed and mobile detailers. Consumers often will... Read More