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More in the 50 Questions SeriesHow does the structure of the VC industry impact investment strategy? | 50 Questions: To what extent should I encourage competition between VCs? | 50 Questions: What is anti-dilution/downround protection? |
How does the structure of the VC industry impact investment strategy?
Together with Nic Brisbourne of The Equity Kicker / DFJ Esprit, I am writing a series of 50 questions you should ask when raising venture capital. We expect the series to run for a year, after which we will collate the answers into a book. We view this as a collaboration, so please comment to help make this series even more useful. This is post #9 in the series.
As Nic and I try to demystify the venture capital industry, we decided it was important to help entrepreneurs understand the pressures on the VCs to whom they are pitching.
(As an aside, I think this is critical to any sales process: you need to understand the pain points, the pressures and the motivation of the people to whom you are selling you are not trying to convince them why your product is objectively the best; you are trying to demonstrate how it will solve problems that your prospect wants to solve this or to create opportunities that excite them.)
The venture capital industry is no different. Most VCs have money that they have to spend. They also have, as previously discussed, limited partners, specific structures and changing investment needs.
In this week’s post, Nick talks about closed end venture capital funds, and how they impact the capital raising process.
Hungry for more? Go to the 50 questions homepage for more insights into venture capital.