13.4 Venture Capitalists

Like angel investors, VCs are often…

But unlike angels…

Typically, these venture capital money managers form a…

The fund usually goes through what?

Unlike angel investors, VCs are not really interested in…

The majority of VCs invest in…

It is extremely rare for VCs to invest in…

In fact, it is commonly believed that seed-stage entrepreneurs have a better chance of…

Most of the deals VCs participate in are…

However, when considering an investment in a business, many VCs actually look for entrepreneurial ventures that have…

Why?

In other words…

Even if VCs do invest in young companies, their investment often comes at a price as they tend to…

Although it is rare for seed-stage entrepreneurs to receive venture capital, it is not impossible. True or false?

What is widely regarded to be one of the most successful seed investments in history?

One of the most useful ways for entrepreneurs and VCs to succeed in the future is to…

Venture capital traces its roots back to…

Wealthy families such as the Rockefellers, Bessemers, and Whitneys were looking for ways…

Although venture capital was largely disorganized and somewhat informal at this stage, a more professional structure called…

American Research and Development (ARD)

Who was considered the “father of venture capital?

Today, ARD is mostly recognized for its…

Small Business Investment Act of 1958

What happened during the 1960s?

What happened in the early 1970s?

However, the venture capital industry began to experience a new high thanks to a…

1979 Rule

However, despite billions of investment in startups by multiple venture capital firms during the 1980s…

Because of these problems…

As a result, growth in the venture capital industry…

After this slow period, another boom was just around the corner known as…

dotcom bubble

During the late 1990s, what were among the first tech firms to receive venture capital funding?

The early dotcom businesses themselves made big mistakes. Why?

As a result…

dotcom crash

Why and what happened?

Since the crash…

Trends in Venture Capital Investment

Due to the gradual rise in venture capital investment in the years after recovery from the 2008 worldwide financial crisis, some experts predicted that…

Was this true or false?

False. Why?

However, venture capitalists are…

Venture capitalists heavily invest in 7 sectors:

B2B Emerging Spaces

B2C Emerging Spaces

Energy Emerging Spaces

Finance Emerging Spaces

Health Care Emerging Spaces

IT Emerging Spaces

Materials and Resources Emerging Spaces

Venture capital firms work…

By narrowing these options, investors are often able to…

VCs have very…

Unlike banks, which seek return on capital through interest payments, VCs look for…

They place a high value on…

One of the most important criteria for assessment is…

The VC will base its decision on…

VCs take an interest in entrepreneurs who surround themselves with…

In relation to the industry, your company will be assessed for…

The VC will also ensure that your goals for…

The decision regarding the amount of investment will be based on…

In short, investors look for three main things:

However, they do not give these factors equal weight:

Most investors would rather have an…

First, recognize that venture capital is a…

Typically, a venture will not see an exit event until…

If all is going well, the VC will provide…

The process of choosing a suitable VC is going to involve in-depth research on your part, and the first step is to…

In some areas it’s still true that investors rely on a trusted network, a tight circle, to send them deals. However, as younger VCs emerge, they are becoming…

When you as an entrepreneur get the opportunity to meet with a VC, it is important to be prepared.

You will be expected to explain clearly and concisely…

By providing this information to the VC, you are displaying…

If the first meeting goes well, then…

Following the second meeting, the…

On average, a partner in a VC firm will do only…

This means a couple of things:

One of the most common reasons why VCs do not choose certain companies for investment is that…

As with angels and their criteria, some of these factors are…

Another reason funds reject some applications is that…

Reasons VCs Might Say No to Your Business

When equity financing is not an option, which for the majority of entrepreneurs it is not, then…

Debt Financing

Earlier we talked about convertible notes, a form of debt financing, but for many small businesses…

New business loans are…

Banks expect entrepreneurs to have the following:

Capital

Collateral

Capacity

Credit Rating

The point is that whether you approach an angel, a VC, or go directly to a bank, there is…

The best way to secure funding is to…

Investors of all types, banks, and entrepreneurs go through a process to build a trusting relationship that will last a long time. Decisions and deals are not made overnight. If anyone is considering investing or loaning you money, the next stage is…