Venture capital

“Success comes when opportunity meets readiness”.

- Zig Ziglar, Hilary Hinton "Zig" Ziglar

Стартапам

For entrepreneurs seeking to raise venture capital, it is critical to know the rules of the VC game. Very often even a brilliant idea and a thorough business plan do not guarantee access to venture capital and more so to “smart money”.

What differentiates venture capital from other investment sources is extremely high risk level. VCs look at risk in terms of whether ROI on $1 invested in a successful startup will cover $10 invested in all unsuccessful ones. 

How VC world works

Venture capital is usually associated with tech companies because of innovation component which allows for building scalable businesses, exponential growth and what is important for a VC – generate huge ROI. Yet it is also associated with very high risks related to market fit, technology, and product adoption.

VCs always try to minimize and control risks. For this reason they normally invest in those sectors they know best and at those stages where they have most solid expertise. Professional VCs bring “smart money”to the table – it is more than just funding, it is strategy, hands-on experience, valuable contact network, access to potential partners and customers. 

As VCs do extremely scrupulous due diligence so entrepreneurs should do theirs on their potential investors. It is the expertise and professional qualities of the VC that will help an entrepreneur find optimal direction in business development especially in highly competitive environment.

Venture capital is always targeted for specific purposes, i.e. to fulfill specific goals and objectives within specific timeframes, such as validating assumptions at early stages related to marketproduct development, and team and processes in order to prepare for effective scaling and expansion to new markets.