Introduction to Venture Capital (VC)

A Venture capital is a private financial company that provides funding opportunities to high-growth start-ups.

VENTURE CAPITAL (VC)

A Venture capital is a private financial company that provides funding opportunities to high-growth start-ups. These start-ups may be at an early stage or at a later stage of development. Usually, venture capitalists are focusing on high-growth industries like the internet industry.

  • The funding choice of venture capital is ideal for new companies that are dynamic but too small in order to raise funds in the capital markets

Venture Capital Roles

Important roles in a Venture Capital except for the management include:

  • Venture Capital Management (they get paid by investors and receive an annual fee of 1-2% of the total capital plus a performance incentive of 10-20% of the venture capital profits)
  • Venture Partners — (they are employees tracking potential investment opportunities)
  • Principal — (they are experienced employees in a particular field like investment banking or business consulting)
  • Associate — (below principal, it is an apprentice position)
  • Entrepreneur-in-Residence (the EIR are experts in performing due diligence on particular types of industries)

How a Venture Capital Chooses Partnerships

Venture capital is focusing on a business model, management, innovation, technology, projected growth, and projected cash flows. Venture capital does not focus on projected dividends as venture capitals usually sell their equity before a company enters the dividend period. The common timeframe of venture capital is from 3 to 7 years. Venture capitalists carry out precise due diligence before they enter a company’s share capital and they give extra weight to the past consistency of the company’s management.

5-Stages of Business Development

There are 5 main stages of business development:

  • Business Idea
  • Start-up Foundation
  • VC Entrance
  • Start-up Expansion
  • VC Exit

Our Tips for Creating a Business Plan to Fund your Start-up

A solid business plan should consist of a brief analysis of the industry and the business model, a brief presentation of the proven experience of the management team, high projected growth, and cash-flows analysis for at least 5 years ahead. The average projected IRR (internal rate of return), should be at least 30%. Don’t try to promise to deliver things you will not able to justify. Be precise and accurate, especially as concerns the fixed cost, and in order to project future growth use at least 3 different scenarios. Here are some good tips for the ideal business plan:

1) Describe briefly the growth opportunities of the industry by giving weight to future technological developments

2) Describe how the management team has the experience and the capabilities to serve that industry better than the competition already does.

3) Present at least 3 scenarios describing future growth (basic scenario, unfavorable scenario, and optimistic scenario)

4) Cost analysis: Divide Cost into Fixed and Variable and evaluate the Cost Per Unit and the Marginal Cost

5) Make a reliable cash flow analysis for 5-10 years ahead.

Major Global Venture Capitals List

1) 3i Venture capital, Visit 3i

2) Accel Partners Venture capital, Visit Accel Partners

3) Advanced Technology Ventures, Visit Advanced Technology

4) Alta Communications Venture capital

5) Alta Partners Venture capital, Visit Alta Partners

6) American Research and Development Corporation

7) Ardesta Venture capital, Ardesta at Bloomberg

8) Atlas Venture Capital, Visit Atlas VC

9) Austin Ventures, Visit Austin Ventures

10) Azione Venture Capital, Visit

11) Battery Ventures, Visit Battery Ventures

12) Benchmark Venture Capital, Visit Benchmark

13) Bessemer Venture Partners, Visit Bessemer Venture Partners

14) Bootup Labs, Inc

15) Brentwood Associates, Visit Brentwood Associates

16) Burr Egan, Deleage & Co. Venture capital

17) Canaan Partners Venture capital, Visit Canaan Partners

18) Carmel Ventures, Visit Carmel Ventures

19) Charles River Ventures, Information

20) Clearstone Venture Partners, Visit Clearstone Venture Partners

Here are some good Venture Capitals for US Early-Stage Companies :

Maryland Technology Development Corporation

Columbia

Draper Fisher Jurvetson

Menlo Park

Ben Franklin Technology Partners Southeastern PA

Philadelphia

Innovation Works, Inc.

Pittsburgh

New Enterprise Associates

Baltimore

Ben Franklin Technology Partners of Northeastern PA

Bethlehem

First Round Capital

West Conshohocken

Mohr Davidow Ventures

Menlo Park

Kleiner Perkins Caufield & Byers

Menlo Park

Domain Associates LLC

Princeton

General Catalyst Partners

Cambridge

Intel Capital

Santa Clara

Village Ventures

Williamstown

 

Here are some good Venture Capitals for US Later-Stage Companies :

Advantage Capital Partners

New Orleans

Goldman, Sachs & Co.

New York

Edison Venture Fund

Lawrenceville

Oak Investment Partners

Westport

Rustic Canyon Partners

Santa Monica

Greycroft Partners

New York

Greylock Partners

Waltham

Khosla Ventures

Menlo Park

Mohr Davidow Ventures

Menlo Park

Palo Alto Investors

Palo Alto

Sequoia Capital

Menlo Park

Accel Partners

Palo Alto

Altos Ventures

Menlo Park

Ben Franklin Technology Partners Southeastern PA

Philadelphia

 

Venture Capitals

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