Venture Capitalist

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Venture Capital, the NVCA, and Whether It Fits

The energy of a capitalist economy is not driven by the decree of government or a wealthy monarchy, but by the forces of supply and demand. For the entrepreneur trying to find the means to foster and expand the seed of an idea into a fully functioning business, demand alone is insufficient to get the capital into place to build, improve, and bring that idea to fruition as a good or service. A new business needs funding for marketing and production, and a venture capitalist is someone looking to invest in and greatly profit from that need.

Venture capitalists typically come in the form of venture capitalist firms who are tasked with overseeing a number of ventures, or small or growing businesses for which they have a significant share of ownership and the firm is looking to expand the size, scope, and profitability of. A venture capitalist generally seeks out entrepreneurial spirits with ideas that have a lot of potential for high growth and thus high return. Unlike an angel investor, who is someone with sufficient ability and desire to invest in an unfunded idea itself and get an entrepreneur started from idea to proof of concept, a venture capitalist often looks for those who’ve expanded beyond the initial stage of funding and have their proven concept and to take that endeavor to the next level, specifically to growth.

Venture capitalism is often associated with new technologies. Many venture capital firms exist on the west coast of the United States, where companies like Apple proved the high adoption rate of products with microprocessors and the proven, huge potential returns possible there. These firms have grown and despite a decline and change of focus during periods like the 1987 stock market crash or the dot.com bubble burst, they are currently widespread and high profile. Google Ventures is one such monster of a venture capitalist, employing influential personalities like Kevin Rose, founder of Digg.com and former television host, to attract and reach out to potential clients.

For those seeking investment from venture capitalists, there is always the benefit of living close to geographic centers of finance and technology like northern California, where the eyes and ears of investors are often focused. Get to know the names of firms and where they are located, and search out the types of businesses they invest in. Scan websites of venture capital firms and contact them to learn more if you can’t find anything online.

Chances are, if you’re at a stage where you’re seeking venture capital, you already have experience presenting the value of your enterprise to a potential investor. Have a presentation. At the very least, have images, a landing page, business cards, and be ready to give or show them all to a scout for a venture capital firm at any moment. Networking is key. These firms are looking to consume a large portion of your company’s equity in order to get a correspondingly large return. They want to see the unrealized potential of your brand, believe that with the right funding you have the talent and capability to lead its growth based on their cash infusion, and ultimately, in less than ten years but typically on a three to seven year schedule, they will want to unload their ownership through a sale or initial public offering of company stock (IPO). Knowing the VC’s goal here, to make money from your blood and sweat for the sole purpose of a high proportion of the returns, is key. You must be prepared to give up a significant share of ownership to get the amount of funds a VC has to offer, and likewise be the salesman with the elevator pitch to convince them quickly that your venture is worth their time and money.

Venture capital is not for everyone and may be a last resort if credit lines and other sources of funding are insufficient. The stake of ownership can be high, and becoming another acquisition in a portfolio of other ventures may make the VC management’s input a bit unfocused for your business depending on the size, talent, and dedication of the VC firm you partner up with. You aren’t necessarily dealing with the wild west of investment, though. The National Venture Capital Association has arisen as an organization dedicated to establishing and maintaining standards in venture capital behavior and policy on the government level. The NVCA lobbies in Washington, claiming it advocates for policies that facilitate and improve venture capital investment. It claims to have approximately 400 members and provides professional services to them. This association takes official positions on issues that the government oversees to further the rise of new enterprises which the firms involved can invest in and profit from. In so many words, they endeavor to facilitate capitalism itself to ensure a growing client base for VCs.

On issues like Net Neutrality, the NVCA advocates for the approach that best facilitates the opportunity for investment, like a free and open internet where a small startup can take advantage of new technologies or existing infrastructure like the internet. Like any lobbying group, it serves the interests of its constituent members. While cable providers might want to come up with tiered plans or fast lanes for internet users to maximize their profitability, the NVCA furthers only what serves venture capital firms, not the business community as a whole. On the issue of entrepreneurialship, the NVCA supports law that facilitates immigration that would result in new businesses. even though tighter immigration restrictions might be a different organization’s calling. The NVCA proves itself to be an industry organization, working on behalf of its members.

If there is one thing to take away from examining venture capitalists, it’s to understand that the opportunity for growth is the most desired quality in a prospective investment. Whether it’s a firm or the association dedicated to it, venture capitalism thrives upon and demands more opportunities for investing at an early stage where they see the potential for an increase in the bottom line figure. If you’re looking to adopt venture capital, be prepared to convince the VC that your business is far from its maximum potential. Do not hesitate to examine the trends of VCs as a whole, and use the NVCA website as evidence of what they’re looking for: emerging technologies. green innovation, the internet, and be sure your product has promise, whether it follows trends or promises to surpass them, as Apple did long ago.

 

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