- Source link https://www.investopedia.com/articles/financial-theory/11/how-venture-capitalists-make-investment-choices.asp
The objective of VCs is to invest early in the “next big thing” to realize hefty returns once they sell their stake. They look for companies with excellent potential and analyze characteristics like management and product, as well as market environment and potential risks.
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- Topic Tags
VC funding, VC fundraising process, VC objectives
- Relevant questions addressed
What do VCs look for in companies?
How do VCs decide to invest in companies?
- Summary bullet points
- VCs look for good, experienced teams that can reliably grow and expand the company beyond its initial life stage or that can hire someone that will
- The market environment needs to be favorable to the company, which should have the potential to generate high sales numbers. Founders need to provide detailed market research in their business plan
- Products with a competitive advantage that can guarantee the company will create value in the medium to long term from the start
- VCs look for founders that can accurately evaluate risks concerning their company and successfully address them. VCs like to know what the risks are
- Follow-up links
Identifying and managing business risk - https://www.investopedia.com/articles/financial-theory/09/risk-management-business.asp
Competitive advantage - https://www.investopedia.com/terms/c/competitive_advantage.asp
5 things to remember when writing a market research report - https://www.crresearch.com/blog/market-research-reporting-getting-to-the-heart-of-it
Business plan - https://www.investopedia.com/terms/b/business-plan.asp