Guide to Venture Capital Industry Focus

If you choose to focus on the venture capital industry when searching for funding, you should know what to expect. Obtaining venture capital has its pros and cons and, as a business owner, you need to balance your concerns with your desire for funding.

The industry focus on venture capital is often one of a bottomless purse providing money with no strings attached. This is not how most venture capital firms work. Venture capital firms are an excellent choice for funding, as long as you are clear on the requirements of accepting these funds.

1. The goal of the venture capitalist industry is to make money. They require clear documentation and proven leadership before handing out funds.

2. Focus on the venture capital industry if you do not mind handing over some control of your company. Many venture capital firms expect to place their own people in key positions within your company.

3. With so much industry focus on venture capital firms it is easy to lose sight of the fact that there are other financing options available. Growing businesses often use grants, loans and private investors.

Action Steps
The best contacts and resources to help you get it done

Use venture capital industry focus to your advantage

The industry focus of many venture capital firms is very narrow. Firms that specialize in healthcare may not handle technology. Some firms have an even tighter focus. For example, some prefer to fund healthcare device research and development, but not research for new medications.

I recommend: Narrow your list of potential venture capital companies by using the subscription based Galantes Directory or visiting vFinance.

Focus on the venture capital industry when developing your business plan

With the industry focus on venture capitalists, it is surprising to learn that many companies are under-prepared when approaching a venture capital firm.

I recommend: Learn what to expect by visiting How Venture Capital Works. If you do not have the time, or find the process intimidating, consider using a venture capital consultant, such as Venture Capital Consulting, to prepare a presentation for your company.

Determine what type of funding each venture capital company offers, and how it will meet your needs

There are different types of venture capital funding available. Many venture capital firms prefer to offer a limited type of funding. While the venture capital industry focus determines what firms are a good fit for your company, the stage of funding they offer is important as well. Funding is available for seed, start-up, first, second, third and bridge stages. Typically any funding after the bridge stage will prepare the company for an Initial Public Offering.

I recommend: Business Resource Software offers a searchable database of venture capital firms. Capital Vector offers an easy to search database that you can download to your computer.

Tips & Tactics
Helpful advice for making the most of this Guide

• The industry focus on venture capitalists has increased competition for funds. To win funding, your research, business plan and presentation must be top notch. Whether you assemble these materials yourself or outsource, do not skimp on quality.
• Before accepting any money, have your attorney look over the venture capital agreement, and answer any questions that you may have about paying back the loan, the level of involvement of the venture capital firm and what documentation you are required to maintain.

The official source of Venture Capital Industry Focus is
the Venture Capital Industry Focus page at Business.com