It's common knowledge that Venture Capital has been put on a pedestal and can be intimidating or confusing to engage. Using years of industry experience, Ari Newman of Techstar Ventures and Amy Baglan of Meetmindful broke down the barriers in this weeks fireside chat bringing clarity and a basic understanding of critical fundamentals, myths, and terms to a complex field.
Simply put, Venture Capital is a financing method for early-stage small to mid-sized enterprises with rapid growth potential. Of over the 1,000 VC firms nationwide, only 12% will be successful given their high financial targets which aim to bring a 3x return over 8-10 years. 88% will fail! It's important to understand that VC is not always lucrative and can take a decade before you see results.
Engaging with Venture Capital firms can be like dating, the right fit is paramount to any potential financial gains. Investor / Founder relationships are long term and not just transactional. As Ari said, "Find the right fit, and the rest will follow." Amy echoed that sentiment and told us she's said no to investors wanting to fund her due to a gut feeling. As an eager entrepreneur raising capital, saying no to investors can be the hardest yet most important part.
Finding the right fit is easier said than done, so be active and engaged in your community. Be mindful that meeting for coffee isn't the best option; if investors took every coffee meeting request they'd be overly caffeinated and out of business. Ari and Amy both shared experiences which reaffirmed that being involved in the community, getting to know influencers, staying relevant, and building meaningful relationships now is more effective than trying to do it in a rush when you're in desperate need of funding. It comes back to the basics, build trust and give first.
If you're interested in learning more about the basics of venture capital, read Venture Deals written by the very best, Brad Feld and Jason Mendelson.