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Venture Capitla Firms
- Thread starter Judo Tom
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Mr.X
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Judo Tom said:
what kind of capital? (amounts) what's the idea? what kind of % are you putting up? have you gotten capital before? if so, how much, when, where, for what? do you have a business plan? how long have you been in business? if a start up, what makes it special?
Mr.X
VCs are very sophisticated investors. You had better have your stuff perfect if you want to garner their interest (at best you will get one shot) and then you had better understand the monetary value of your proposition because they are going to make their own estimate and you'll have to negotiate. I would advise locating a local entrepreneur club or organization. Very common around universities. Talk to someone at the business school, they can probably point you in the right direction. Also, a good number of VCs prefer not to fund outright startups, they want to see some operating success and assist in taking you to the next level (beyond capital they often have industry or operational expertise to leverage into the deal - you want to research a VC before meeting with them if you are lucky or submitting a business plan - if their expertise is in biotech and you are pitching a new rolodex product you are wasting your time, theirs, and associating lack of due dilligence with your name and your company). If you can get dialed into the local entrepreneur scene you can make all sorts of contacts that may lead to VC or angel investor interest. Universities, clubs, search the internet.
And yeah, a business plan is absolutely essential. Go to the library or bookstore, check out a book and some examples. I think there's some software (Business Plan Writer Pro?) but reading the books is more important first.
And yeah, a business plan is absolutely essential. Go to the library or bookstore, check out a book and some examples. I think there's some software (Business Plan Writer Pro?) but reading the books is more important first.
Madcow2 said:
Bullshit. Bullshit. Bullshit. They lose more than they win and are known in biz circles as "Vicariously Capable"
We met with 29 VCs before we got a deal we would like. There are millions of VC groups.
The kids of things they care about are valuation, stock distribution (by percentage as well as class of stock, how it pertains to voting rights. If you don't understand this shit, you should talk to a lawyer about it, or me, I live in this world, lol).
This is a good idea, there are also plenty of places to look on the Internet. Knowledge is power.
True.
This could be true, but it is usually complete bullshit. The usual scenario is they know a few investment bankers, usually junior guys, who are strying to impress their managing director so they try to generate fees for the bank and don't know the people that can really help you.
As for operational expertise...never seen that from a VC...maybe in some tech sectors...maybe. But the VCs I know...hundreds of them, are guys with great academic resumes and little if any business leadership experience.
This is boilerplate shit.
Bor, I am not trying to flame you; our biz raised over $20M in VC money and we met with 29 VC groups, I could talk about this subject all day, but what I can tell you is they are known by business leaders as "dumb money" and usually are. Now we are trying to do an LBO to get them out since they are an albatross and we are very profitable.
Judo Tom, PM me if you want, I know this stuff cold, i deal with these guys every single day and i can tell you what to expect every step of the way.
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Judo Tom said:
PM it if you'd like, I will start a VC thread on here too.
We are banking / finance / insurance / legal with a heavy software component.
MattTheSkywalker said:
You could always just write your own post rather than line by line mine. I would think your experience would warrant an original post sans the 7 quotes (and I'm not being sarcastic - 29 meetings/$20 mil/now LBO).
A sophisticated investor does not mean successful (the terms are not synonomous), it refers to details of valuation. After all, this is the core of investment and that's all VCs are - an investment manager with a pool of capital. From the initial post, I kind of assume I'm not advising a finance squid and I'm trying to save him burning up his time/leads on an easy learning curve. Unfortunately VCs subsidize their losses with wins (and they assume they will lose a good percentage) hence the high rates of return often demanded - and why as a good manager and company should one be penalized for their poor historical track record is an interesting question.
There are actually some studies that demonstrate VC backed companies succeed significantly more often but I attribute this to some biases (survivorship and some cherry picking leaving the obvious garbage to the non-VC bin) rather than to the majority of VCs actually being very good at this.
