A venture capital firm looks beyond the idea and is often more concerned with the team who will deliver the business growth.
In the same way, when seeking an investment by a venture capital firm, don't just spend your time marching up and down Sand Hill Road, rattling the tin for contributions hoping for the quickest offer of a term sheet. Instead, you need to view the process as a courtship. In the same way that a job interview is really an "inter-view" - an opportunity for a company to size you up, but also an opportunity for you to gain direct insight into the team you may be working with - you need to work out if you can work with this team.
- Will the VC team be able to help marshal all of the non-financial resources you will need to scale up your business?
- Will they be an active or passive board member?
- Can they help you find the right staff and do they have the connections to help you get the product or service to market quickly and efficiently?
- Will they be a useful sounding board and source of ideas for when the going gets really tough?
Bear in mind that for the VC money they will have active board involvement to ensure that they maximize the return to their investment and minimize the risk that the entrepreneur is going to make mistakes. And they have most likely seen all those mistakes before.
Remember that this relationship will likely last several years and for the success of the business, it has to last. But there will be an end - because the VC must be focussed on 'the exit'. VCs are always looking at how they will recoup their investment and pay back their Limited Partners with profit
So when preparing your pitch remember that the VC is not just a source of finance to help an innovator on the path to mega wealth, you have to make the relationship work.
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