7 things I learned about venture capital while interning at a VC firmOriginally Published on Business Insider


Originally Published on Business Insider

The idea behind venture capital is really quite simple: Pour money into companies to help them grow.

The nature of the industry may be straightforward, but it is marked by competitiveness, risky bets, and high turnover. A lot is up in the air.

After interning at a VC firm, I’ve gained enlightening experience that has helped reveal the thought process behind these life-changing investments.

I still subscribe to the idea that the best people and companies will get the money they need.

However, I think that learning a few concepts will help you better understand the process of raising money, and perhaps give you a leg up.

Here are seven insights I picked up behind the scenes that I will be sure to consider before building my next company:

1. People win

Speculating on ideas is really hard. Why? Because they are fluid and incessantly seem to change (pivot). That is why investors often invest in the people before the idea.

They know that, in the long run, the best people will build the best businesses, not the other way around.

If you want to raise money, start by defining yourself as an entrepreneur and figure out your most valuable qualities.

2. Be direct

You’d be surprised by the number of entrepreneurs who struggle to present their brilliant ideas concisely and effectively.

Forget the fancy keynotes and distracting animations. You should be able to deliver your pitch so that potential investors can make a decision based on facts and intuition, not fluff.

3. Make it easy

Make it really simple for VC firms to understand you as a company, and, even more than that, the ecosystem you belong to as a whole.

Be transparent with all your information. You want the firm to be able to perform due diligence and make the best decision quickly. The more you hide, the more questions will arise.

4. Do your research

Venture capital firms receive hundreds or thousands of pitches every week.

The “best thing since sliced bread” is always showing up on their desks. Do yourself a favor by making sure you pick the right VC to contact.

It’s not worth their time or yours to be asking for money when they only have a seed fund or only invest in Series C, for example.

5. Pick the right people

You should be research the VC firm as seriously as it’s researching you.

Look not only for money, but also for partners, mentors, and advisors. People that will sit on your board and make crucial decisions with you. Optimize for both the people and the money.

6. First impressions are huge

Venture capitalists often make decisions quickly … about everything.

To avoid giving off the wrong impression, be punctual, be organized, and know your facts.

7. Have a reason

This may be really obvious, but a lot of people seem to overlook this concept: Have a specific reason you want the money and explain what you will do with it.

Like any investor, VCs want to know where their money is going. Make sure you have ideas planned out before going to pitch!


Originally published at www.jordangonen.com on October 30, 2016.

Tagged in Venture Capital, Startup

By jordangonen on October 30, 2016.

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Exported from Medium on February 17, 2018.