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Venture Capitalists(VC) are a group of individuals with a professional CEO running the venture firms. VCs support startup growth from seed to much later stages.
“VC is about capturing the value between the startup phase and the public company phase.”-Fred Wilson
VC’s are looking to deploy millions of dollars, and they are looking for multiple times return on that capital.( 5 to 10X) That is why, in addition to founders, VCs focus heavily on the size of the market. If they do not believe the market is large enough, they will not invest.
VC's are looking to fund projects that are unique and cannot be easily
Hartwig (Associate Editor at Mashable's)
VCs are attracting a lot of attention in the USA as well as in India. The newspapers, and entrepreneur related magazines glamorize the growth of businesses where VC’s have invested. Rags to riches story of the entrepreneurs with a bagful of money from VC is tempting people to look at this opportunity.
VCs invest in excess of 1-3 million dollars in a venture.
The entrepreneur has an innovative idea. The market has accepted the product or service as it had received seed funding from an angel. Can we assume that everyone who seeks funds from VC has a bright chance of hitting the jackpot?
Do you know, for example, that only 1 percent of funding for startups comes from VC firms? In contrast, 24 percent of businesses find funding from friends and family and more than 80 percent are self-funded. (http://www.entrepreneur.com/article/241331)
Only 3% of startups are funded by VC..-( E-Cell-IIT Kanpur).
One of the well-known Indian angel networks receives 300-400 plans every month. A Venture capitalist told me that only 1-2% of the proposals end up with funding from them.
Most venture capitalists will not read a business plan unless the entrepreneur is introduced to them by a contact.-: Guy Kawasaki
Since VCs deploy large amounts of capital and expect significant returns, the process of raising money from these so-called institutional investors is far from trivial.
The tagline of this VC: Commitment of Money, Time, Expertise & Networks
VC – Value addition
At a Glance- What VCs look at
I. Current Status of Entrepreneur
III. Future Plans
1. A high risk- high return game
2. Hit rate of getting funds is low
3. Funding is for growth stage and is in excess of $ 1 million
4. Criteria in respect of market growth and entrepreneur capability- CRITICAL
5. A strategic partner
6. Significant Wealth creation opportunity
7. Entrepreneur surrenders freedom