What Venture Capitalists Look For
Entrepreneur Magazine recently interviewed three venture capital firms about what they looked for in a company.
Ilya Nykin, Prolog managing director:
Nykin was not shy about calling their criteria for funding “stringent.” ”We were looking for the most breakthrough opportunities that address large unmet needs, that can be brought to market in a reasonable time and for a reasonable investment, and that have some scientific validity.”
Prolog also has a clear idea of the type of leader they prefer. The entrepreneur should have “experience, energy, foresight, drive and vision.”
Andrew Lindner, Frontier managing partner:
Securing funding with Frontier is a slow process. “Our model is to track a company for a while”. Like most venture capital firms, they also have a tight stage and sector focus. ”We are a growth-capital provider focused on highly differentiated service businesses in the Southeast and Mid-Atlantic.”
Adrian Smith, Ignition partner:
Smith again stresses a rigorous funding process. ”It involves the portfolio mix we want to have at Ignition, and [the company] has to meet the business criteria we’re looking for.” What made them happy about this particular company? We “were very comfortable that we had a great team going after a large market. We were also able to agree on terms. There’s a lot to negotiate: the amount being raised, options and vesting of those options, liquidation preferences.”
Note the words associated with funding…stringent, rigorous.
Also important is the tight focus of the firms. Why such a narrow scope?
Because venture capitalists are active partners. They believe in the companies they back. They are involved, often requiring monthly meetings. They want to contribute more than purely capital. To do that, they need experience in the industry.
on July 12th, 2007 at 7:37 pm
Hi Kimber
found your blog via the TRW site, have I interpreted correctly that this is a very new blog and this your initial post?
If so, wowsers - because I just set my own as well and damn but yours looks 100% more professional. That may, of course, be because you know 100% more what you are doing.
Anyway - last time we spoke, a couple of months ago at a monthly meeting, I recall that you were still looking to sell - and from your announcement above I take it you sold in the meantime. Excellent!
I’ll be on my way now, browsing other TRW sites and blogs, trying to learn more about how to put my own baby blog to best use (I haven’t, for example, been able to figure out how to search the blogger site to find like-minded blogs. That ‘next blog’ feature keeps landing me on portuguese sites (interesting, but of limited use to me) and semi-porn sites I don’t want my kids looking over my shoulder at (no matter how well-written. I kid, so far they are all atrociously badly written).
yours, M.