Is Venture Capital Right for You?

I attempted and I gave up. When we started out high-tech Merger and Acquisition Apply, I believed it a natural work to additionally provide finder services for Entrepreneurs seeking Venture Capital Funding. That service is now not available. Why not you ask? We have a tendency to failed miserably. Our firm has successfully completed many small high tech M&A deals at nice multiples, however finding venture capital turned out to be a terribly frustrating and unproductive experience.

Sadly many high tech entrepreneurs have eventually landed on our doorstep totally drained from their expertise of trying to raise venture funding themselves. Quite frankly, the method has caused several of these businesses to fail. According to venture business statistics only a pair of% -3% of corporations seeking venture capital really are successful in receiving funding. Only 2 out of 10 of these corporations that receive funding provide the target returns for the Venture Firms. Since their failure rate is therefore high, they're looking for a thirty to 1 return on their cash in their 3 or four year exit period.

It is usually not a sensible plan to alienate my readers, however the most important drawback that entrepreneurs have is that they are inexperienced concerning this whole process. They typically have unbridled optimism about the price of their company, plan, product, or technology in the marketplace. These entrepreneurs are usually the inventor or the author of the computer code and don't seem to be sales or business development guys.

They are doing not perceive the sales process. After all, raising Venture Capital is the ultimate sales job. These tech-focused individuals can be strung along by the Venture firms unless they need a record of beginning a corporation and creating investors rich. In that case the Venture Companies fight for his or her place in line to convey you money. I'd usually speak with high-tech entrepreneurs who simply completed "a great meeting" with XYZ Ventures. They might excitedly tell me that XYZ asked them for a report on this, pro-forma's for that, projections for this, a competitive analysis of the main players, etc. They'd then schedule another meeting.

Our entrepreneur is thinking they're on the verge of landing the large one. My response is, "How a lot of are they paying you for educating them on your space." The image that comes to mind is once you were a child and were employing a magnifying glass to expend ants on an ant hill - reasonably sadistic torture.

For you tech guys out there, this can be not Field of Dreams - If you build it they will come. It is business and therefore the mantra is - If you sell it they will come. Recover from your bias of not valuing the sales process and go faucet the simplest accessible sales and marketing person you'll find to partner with you. Build a client following that demonstrates a trend instead of a couple of isolated successes. Then go realize a giant strategic partner to acquire you at fantastic multiples. Work through your non-compete period and then launch your next nice idea. Go to the venture guys from your new-found position of strength and tell them to induce in the queue to supply your venture capital.

ArticleSource: ArticlesAlley.com