While every potential venture capital deal hinges on various factors, there are three important valuation factors that fit across the board for venture capital firms. Here is a look at the top three valuation factors that could give you an edge when approaching a venture capital firm.

1. Management is Everything

In a poll conducted by the authors of Inside Secrets to Venture Capital, venture capital firms were asked to rate the factors they use to determine the value of a potential investment. By far, the top rated factor was the quality of management.

VC firms were asked to rate the factors on a scale of 1 to 5, with 5 being the highest importance. The numbers were overwhelmingly in favor of the management team, with nine out of every ten VC firms rating this factor a 4 or 5. Seven out of ten rated this top factor a maximum of 5. The average rating for management team was 4.5, and no other factor even came close.

What does this tell you? Make the effort to recruit and attract the best possible people for your company. VC firms know the value of a management team who can weather storms and guide a small business to big success.

2. Size of Market

The next most important factor in the poll was the size of the market. The average rating for this factor was 3.8 out of 5.  30 percent of venture capital firms rated this as the highest importance. Thus, it is important for you as an entrepreneur seeking start up capital to find a market that is sizable, yet penetrable.

3. Product Qualities

Product quality was actually third on the list of top importance to venture capital firms. Only 25 percent of respondents said this was top importance, and the average rating (out of 5) was 3.7.

Along with product quality, venture capital firms look at the product’s uniqueness, the brand strength, and potential patent and intellectual property assets.

With these factors in mind, now you have an inside look at what venture capital firms are seeking. Be sure you design your new company with these top factors, and you will stand a better chance of getting a “yes” for venture capital.

Tags: angel investors, business capital, business funding, business startups, find angel investors, find venture capital, funding, startups, vcs, venture capital

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