Published on January 30, 2009 by davidguide
photo credit: Kevin Krejci
Many entrepreneurs only focus on bleeding-edge, burgeoning markets when developing their technology, product or service offering. This is done for various reasons including:
* The perception that burgeoning markets have limited competition,
* The ability to establish an early foot-hold to increase the value of their company, and
* The reality of the difficulty in developing a differentiated, long-term competitive advantage in large established markets.
This article outlines why this market approach is generally too risky for many venture capitalists and then provides five reasons why venture capitalists prefer large established markets over bleeding-edge, burgeoning markets. (more…)
Published on January 30, 2009 by davidguide
photo credit: sylvain.landry
Venture capital is high-risk but also high return investing in support of businesses just starting, also called: start-up companies. In pursuit of high returns, a venture capital firm raises a fund of very big sums of money – six and seven digits (or even more), to establish the company and later see very nice profits from their investment.
Venture capital is considered a game for the smart investor. The money that goes into a venture capital fund is raised from wealthy individuals or institutions. The Venture Capitalist usually checks out the company that is interested in the investment, and many times has one of its board members join the board of the company that is receiving the investment. Not all characteristics Venture Capitalists look for in an investment actually help a company succeed; some may just reveal value the company already had. The relationship between the investor and the company is sometimes like a marriage, there is courting and hopefully afterwards a long time relationship. Some features investors seek in a company are not directly related to the chance a company will succeed. Instead, as part of this process or the “courting game”, the Venture Capitalist makes sure that the data and information the company is giving the investor is accurate and that he or she are not wasting their time and money.
The world of Venture Capital Investments is developing all the time, and every single day there are new investments all over the world. (more…)
