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Posted by N8 (Member # 6048) on :
 
Has anyone ever dealt with, sought out or been approached by a venture capital firm? If so what your opinion on it/the process?

I'd like to hear any and all opinions.
 

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Posted by DIRTY SALLY (Member # 7845) on :
 

 

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Posted by myzticsnake (Member # 9334) on :
 
Venture is a good way to go if you need a nice influx of capital or want to bring in some industry experts to start/grow a business.

Venture firms typically will only pursue deals that can lead to huge gains when a company goes IPO or is sold, think 10x minimum, 100x preferable.

Caveats to the process is that you can lose control in the direction of your business as the venture company or companies will make up the majority of your board of directors and can fire you as the CEO at any time.

Shopping for a venture firm can be quite a process. Some people have to go to 50-100 firms before they are offered their first term sheet. I'd make sure that if you are really interested in the process, that you get a solid lawyer to help with any contracts to make sure you get a deal that meets your terms. If the deal sucks, you will lose interest and the business will fail.

Another option outside of venture is an Angel investor. Could be a good family friend or someone wealthy who just wants in on the idea. They can be hard to find, but they can definately be awesome to get you up and running.

The best route IMO and from other's I've spoke with/listened to is to boot-strap the company for as long as you possibly can. If you can take the company public/sell it with 100% ownership, not only is the experience better, but the financials are way more lucrative as venture firms usually take about 70% ownership.
 

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Posted by RONIN (Member # 9987) on :
 
Very interesting myztic
 

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Posted by N8 (Member # 6048) on :
 

quote:

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Originally posted by myzticsnake:
Venture is a good way to go if you need a nice influx of capital or want to bring in some industry experts to start/grow a business.

Venture firms typically will only pursue deals that can lead to huge gains when a company goes IPO or is sold, think 10x minimum, 100x preferable.

Caveats to the process is that you can lose control in the direction of your business as the venture company or companies will make up the majority of your board of directors and can fire you as the CEO at any time.

Shopping for a venture firm can be quite a process. Some people have to go to 50-100 firms before they are offered their first term sheet. I'd make sure that if you are really interested in the process, that you get a solid lawyer to help with any contracts to make sure you get a deal that meets your terms. If the deal sucks, you will lose interest and the business will fail.

Another option outside of venture is an Angel investor. Could be a good family friend or someone wealthy who just wants in on the idea. They can be hard to find, but they can definately be awesome to get you up and running.

The best route IMO and from other's I've spoke with/listened to is to boot-strap the company for as long as you possibly can. If you can take the company public/sell it with 100% ownership, not only is the experience better, but the financials are way more lucrative as venture firms usually take about 70% ownership.

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quote:

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Originally posted by N8:

quote:

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Originally posted by myzticsnake:
Venture is a good way to go if you need a nice influx of capital or want to bring in some industry experts to start/grow a business.

Venture firms typically will only pursue deals that can lead to huge gains when a company goes IPO or is sold, think 10x minimum, 100x preferable.

Caveats to the process is that you can lose control in the direction of your business as the venture company or companies will make up the majority of your board of directors and can fire you as the CEO at any time.

Shopping for a venture firm can be quite a process. Some people have to go to 50-100 firms before they are offered their first term sheet. I'd make sure that if you are really interested in the process, that you get a solid lawyer to help with any contracts to make sure you get a deal that meets your terms. If the deal sucks, you will lose interest and the business will fail.

Another option outside of venture is an Angel investor. Could be a good family friend or someone wealthy who just wants in on the idea. They can be hard to find, but they can definately be awesome to get you up and running.

The best route IMO and from other's I've spoke with/listened to is to boot-strap the company for as long as you possibly can. If you can take the company public/sell it with 100% ownership, not only is the experience better, but the financials are way more lucrative as venture firms usually take about 70% ownership.

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Thanks man, I have asked this in a couple places to various audiences and this has been some what the answer I have been getting. We do have "seeking VC capital" on our road map and last summer I was approached about the idea by a smaller VC firm. I just do not want to lose control of my vision for my company. And for the most part we are self sustaining and profitable. The allure of going hollywood with this is tempting. But I dont wanna feel like I am selling out too. And potentially letting down my employees as well.

Thanks for the input.

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quote:

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Originally posted by myzticsnake:

quote:

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Originally posted by N8:

quote:

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Originally posted by myzticsnake:
Venture is a good way to go if you need a nice influx of capital or want to bring in some industry experts to start/grow a business.

Venture firms typically will only pursue deals that can lead to huge gains when a company goes IPO or is sold, think 10x minimum, 100x preferable.

Caveats to the process is that you can lose control in the direction of your business as the venture company or companies will make up the majority of your board of directors and can fire you as the CEO at any time.

Shopping for a venture firm can be quite a process. Some people have to go to 50-100 firms before they are offered their first term sheet. I'd make sure that if you are really interested in the process, that you get a solid lawyer to help with any contracts to make sure you get a deal that meets your terms. If the deal sucks, you will lose interest and the business will fail.

Another option outside of venture is an Angel investor. Could be a good family friend or someone wealthy who just wants in on the idea. They can be hard to find, but they can definately be awesome to get you up and running.

The best route IMO and from other's I've spoke with/listened to is to boot-strap the company for as long as you possibly can. If you can take the company public/sell it with 100% ownership, not only is the experience better, but the financials are way more lucrative as venture firms usually take about 70% ownership.

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Thanks man, I have asked this in a couple places to various audiences and this has been some what the answer I have been getting. We do have "seeking VC capital" on our road map and last summer I was approached about the idea by a smaller VC firm. I just do not want to lose control of my vision for my company. And for the most part we are self sustaining and profitable. The allure of going hollywood with this is tempting. But I dont wanna feel like I am selling out too. And potentially letting down my employees as well.

Thanks for the input.

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Pretty much the age old dilema. A venture firm will absolutely demand that you to expand, and expand very fast. Their funds generally only last 10 years, and depending on when you get funded, their exit timeline for your company may only be 5-6 years.

There are other funding choices out there and some may be better suited for your needs. There are consortiums out there that lend money to small businesses. In some areas people will group together and form their own angel "firms" and are much less stringent about company ownership and funding terms.

Also, depending on your company type, you can also get government backed loans or even free money.

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