The Entrepreneur’s Guide To Venture Capital – Recap

After writing the final post of the Entrepreneur’s Guide to Venture Capital earlier this month I thought I would put everything all in one place as well as share some of my favorite comments from the series:

• How To Valuate A Business
• The Grandmother Test
• What To Do In Your Meeting With A VC
• Investment By Industry
• Investment By Stage
• 14 Things VCs Look For (cont’d 4)
• 14 Things VCs Look For (cont’d 3)
• 14 Things VCs Look For (cont’d 2)
• 14 Things VCs Look For (cont’d)
• Investment Amount, Investment Rounds, 14 Things VCs Look For

Favorite Comments:

“Hey another Evan! That was useful info, I’ve often wondered what the criteria is for VC interest. It’s a mystifying game to me, because I have built up my business all by myself and from scratch. I don’t know if I could handle the pressure of owing all that money and not having full control over the direction of the business. I teach people about the cleaning business starting with no money or credit. Pure sweat equity. Thanks again.”

“Evan, two great posts, very informative. I just wanted to mention that #5 is a good point to touch on. We hear a lot of horror story about VC’s in general but if you find the right one they can really be that missing link or booster rocket for you’re business. Just as the VC is evaluating you, you need to evaluate them. “Do they have the contacts and industry experience that could really help me improve my business?” The last thing you want as a young entrepreneur is a bunch of money with no help. Unless of course you have all the contacts you need already. A VC, even an Angel needs to be someone that really fits in and advocates your business, not just a purse. At least this is what i’ve learned so far.”

“Great list. Although I know VCs are a great way to go, not many of us can get them to invest in us. Of course we should never forget bootstrapping and our beloved family and friends (who actually are usually fairly willing to loan your venture money). Recently I have been talking to angel investors for a cash infusion into my three year old environmentally friendly brand of accessories and apparel called Sand Shack… so I will end with one word of advice —be careful—just as evan mentioned, VCs are looking for an ‘unfair’ competitive advantage, why? Because they want an unfair amount of money in return (well, maybe not unfair, but they want a lot, so don’t jump on the first deal that comes your way).”

“Evan, Your series on venture capital is great advice for the new company looking for investment capital. Just a reminder for your readers—VC’s do not “loan” money…they acquire a portion (sometimes a very large portion) of your company, expecting you to make their portion highly valuable when the company does an IPO, or sells through merger or acquisition.”

“I ended up reading all six parts. Very good stuff. For others like me that come in the middle of the series, you might want to add links to all the parts in each of the posts. I’ll be sending others over to these posts. Thanks!”

“The Grandmother test is an excellent suggestion. I tell my startup clients that the first paragraph should include a simple statment of the problem (for grandmother), as well as a description of the solution provided. In the example provided (I have seen many like it), it looks like the startup has a “solution looking for a problem.” Potential investors ditch these immediately.”

I’m glad you enjoyed the series and thank you for the insightful comments as well!

Matthew Toren

Matthew Toren is an Award Winning Author, Serial Entrepreneur, and Investor. He Co-Founded YoungEntrepreneur.com along with his brother Adam. Matthew is co-author of the newly released book:Small Business, Big Vision: “Lessons on How to Dominate Your Market from Self-Made Entrepreneurs Who Did it Right” and also co-author of Kidpreneurs.