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.

Author: Dave Lavinsky
Article Source: EzineArticles.com

It is actually quite easy to raise capital today because of the current climate, so lets look at a brief guide to raising venture capital within say one week. The first step is to conduct an official feasibility study regarding your brilliant idea. This is simply research conducted to paint a picture of the current market of your product or service and the potential markets feedback.

You should present your feasibility study in a professionally documented manner so investors can take your paperwork with them for further discussion.

Along with a feasibility study, to raise capital today, you need to provide supporting statistical information that supports your arguments, opinions and assumptions. This statistical information must be fully verifiable by any third party if they so choose and the organization providing the statistics about the market should be seen as credible.

To find venture capital all you have to do is approach your local lawyers as they always have a loose knit network of associates and clients that look at new opportunities and would be willing to invest in them. A final note is to make sure you cover your own interests by always using a nondisclosure contract. This is a standard contract that can be purchased for $25 dollars from any lawyer ready made. You must make sure that anyone who comes into contact with your idea must have signed this legal instrument, which protects the confidentiality of all details of your concepts.

Author: Terry Hart
Article Source: EzineArticles.com
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