August 28, 2012
Even in the same field of business, there are both subtle and distinct differences that separate one company from another. The same applies to the venture capitalist business. When trying to pin down the best firm for your needs, it is best to look at those that would be most interested in your kind of enterprise.
Area of Expertise- When identifying venture capitalist firms to finance your business, it is ideal to focus on those who specialize in your area. It makes no sense to pursue financing from an investor who focuses on the restaurant business yet you are building a social networking site.
Funds Availability- You will need a venture capitalist firm that can not only finance you in the initial business stages, but also when you will want to expand further in future. It is a good idea to not only consider your immediate needs, but also future plans. The process of sourcing for additional funds is much easier when you have all along had a business relationship with the firm.
Location- Venture capitalists prefer to make their investments within a tight geographical area. Not only are they familiar with the market, but they can also monitor their investments better. Given this preference, it will be easier to stir interest in a venture capitalist who works in the same area.
Track Record- It is important to find out the kind of investment opportunities that the firm has previously entered into. If the portfolio of companies they have worked with are in the same area of business then that will bode well for your chances of securing investment. In addition, this will allow you to tap into their listing and form mutually beneficial business relationships with similar companies.
The Executives- A venture capitalist firm is more than just the money it can provide for your business; it is also the people behind the money. These people are experts in various fields of business. The right pick will not only bring your financing, but also a team of professionals who can provide you with highly valuable knowledge and expertise to help your business grow and succeed.
Business Stage Different venture capitalist firms prefer to invest at different business stages. There are those who prefer to offer initial start-up capital while others only fund for growth. Try to identify firms who are interested in financing your venture at the level you need them to.
To improve your chances of making a successful bid for financing from a venture capitalist firm, make a shortlist of potential investors along these lines of interest.