Your search for venture capital should be focused and directed at particular venture capital firms that stand the greatest chance of helping your business succeed.  Thousands of VC firms exists and are located all over the country.  Each one has specific elements they look for when distributing their VC funds.   How do you choose a potential group of venture capitalists who are most likely candidates for accepting your business proposal?

 

1. Location

Location may be an important key element for a VC firm.  A VC firm may only invest in companies that are within proximity of the VC headquarters.  It may be 100 miles or perhaps 500 miles.  If proximity is not relevant to a particular VC firm, they may also choose potential new businesses that are only located in larger metropolitan areas.  Know the geographical limitations of your potential VC firm before submitting a business plan for perusal.

 

2. Sector

What is your business type and what sector will you serve?  Many VC firms have specific business sectors that they will invest in, such as high-technology or healthcare.  When looking at a pool of potential venture capital firms that you would like to pitch, narrow your pool to those that invest in your business arena. 

 

3. Business Stage

In what stage is your business?  Startup?  Expansion?  VC firms will often specify that they only invest funds in startups, or maybe just in companies who need a money bridge before an IPO. 

 

A startup company puts the VC firm in greater risk for loss due to the potential for failure.  However, the returns and rewards are better when they do succeed.  Conversely, some VC firms will invest conservatively in already existing businesses with a proven track record, but is ready to make a large growth effort.  Know which stage your business is in and seek VC funding from groups that focus on your stage of growth.

 

4. VC Partners

Most venture capital firms are financed by investing partners.  Know who the partners are and which areas of experience each has.  By choosing a VC firm with partners who have experience in your business idea, you may have a better chance at getting accepted for funding.

 

5. Portfolio

Take a look at the investment portfolio of a VC firm.  You may find that they are diversified in a number of different market segments, but some may have primary sectors in which they invest.  Try to find a firm who has invested in businesses similar to yours and were successful.  Good experience in an industry could determine that they will continue investing in that industry with your business.

 

6. Assets

If you are an entrepreneur with a startup business who needs many cycles of capital funding, take a look at VC firms with adequate assets themselves.  You may need early stage technology development, marketing research funding, startup funding, and then progress onto first or second stage funding.  Make sure your potential VC firm will be able to follow your business along its path of success.

 

 

 

 

 

Tags: angel investor, angel investors, Find funding, funding, startup funding, vc, venture capital, Venture Capitalist

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