From the time you started your company, you have done everything alone. You have relied on your wits, your friends, and most of all, your own sweat and tears. The feedback you are getting from players in the industry and from the market indicates that you are truly on to something big. However, if you are gong to succeed - in a very big way - then you must have a large influx of cash as soon as possible.
You ask yourself if going the venture capital route is worth it. You know that it can take a lot of your most precious resource - time. Also, until this moment of truth, you have done everything yourself. Now, if you get venture money, outsiders will be involved in running and managing your company. Finally, you ask yourself a key question: Is all money the same, or do some venture capitalists provide more than money?
Today's Enable answers this and other questions facing companies that are seeking venture capital for the first time. We provide you with a list of the most important added value services that your venture firm must be able to provide. If the potential firm cannot provide these services - then keep looking until you find one that can.
Help You Get Top Management
One of the most important services that your venture firm must be able to provide you is the ability to attract and maintain high caliber management personnel. Your venture firm must have a specialized network of contacts and connections. But, the firm must also have a knack for convincing high level executives to leave their current, well paid jobs to join your team. This is not an easy task, and if you find a venture firm that can do this, your chances of success have improved greatly.
Act As A Sounding Board
Your venture firm must have the ability to conduct brain storming sessions with you and to discuss and critique your strategy, at the earliest possible stage. Your venture firm must be able to act as an objective third party who can rationally assess the advantages and disadvantages of your new ideas and strategies. Your venture firm must also be able to help you develop, prioritize, and then implement your action items. In certain cases, the firm must also be prepared to act as the "final arbitrator" in disputes.
Your Partner Now, And In The Future
Your venture firm must demonstrate that it will be with you through thick and thin - for the long haul. The firm must have the patience and experience to be behind you every step of the way, and to arrange additional rounds of financing that take into consideration the best interests of the company - not the venture firm. The best way for you to determine if your potential venture firm can do this is to speak directly with founders of other companies that the firm has already invested in. This is very important and should not be neglected.
Chemistry Is Key
You must have personal chemistry with your venture firm. You will be spending a tremendous amount of time with the firm and if you do not feel comfortable with each other - both at work and at play - then you must find another firm. The best way to determine this is to meet with the firm socially "after hours" and see how you get along. Then, ask yourself, "Can I live with this person when times are tough?
Additional Added Value That Must Be Provided
Your venture firm must also be able to provide the following:
- Create and maintain an entrepreneurial environment in your company
- Open doors to the decision makers of potential customers
- Industry savvy
- Strategic insights
- Comradeship
- Connections with leading professionals
Venture capital is becoming a commodity. There is too much money chasing to few deals. Venture capital is more than money. The added value that the venture capital firm provides, along with the chemistry between you and the venture capitalists should be the deciding factor when choosing a venture firm.
Published by Israel's Business Arena on December 14, 1999