How Venture capitalists make investment choices by Ben McClure

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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VC funding, VC fundraising process, VC objectives

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What do VCs look for in companies?

How do VCs decide to invest in companies?

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  • 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
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