Questions:
Question 1=
"Selecting a Venture Capitalist" Please respond to the following:
•There is a short guide to selecting a venture capitalist. Analyze the six steps in the guide. Determine which step you believe would be the most difficult for an entrepreneur to complete. Support your answer.
• Given your response to the previous question, construct a detailed plan for enacting the most difficult step of the "Guide to Selecting a Venture Capitalist" (Chapter 10). Provide support for the steps in your plan.
Question 2= comment
There is a short guide to selecting a venture capitalist. Analyze the six steps in the guide. Determine which step you believe would be the most difficult for an entrepreneur to complete. Support your answer.
The step I believe will be most difficult will be step three which is to keep a high profile so the VCs will visit. It is important as an entrepreneur to keep a high profile and it requires time to do so. Due to the high risk in emerging ventures, VCs are very picky. And in a free, capitalist society such as this there are always more dreamers than successes. So it might not surprise you to know that VCs finance only about one or two ventures out of 100 business plans they see. They reject the other 98-99 percent either because they are not in the preferred industries, have not displayed the potential or the proof of potential, have not been referred by the right person, or any one of many reasons (Rao, 2013). This idea would be difficult for me giving my business has not gained the recognition or the sales as of right now.
Given your response to the previous question, construct a detailed plan for enacting the most difficult step of the "Guide to Selecting a Venture Capitalist" (Chapter 10). Provide support for the steps in your plan.
More entrepreneurs may get VC, but the proportion seems to be about the same. Most VCs like to invest in ventures after the potential has been proven and the risk reduced. In the first quarter of 2012, only three percent of VC funding went to start-ups. So about 97 percent goes to ventures on a post-startup basis, and the number of ventures funded increases to about 3,000-3,500 (Rao, 2013). With that being said, it is imperative that I use funds from personal account and angel investors first. After that I will try to build a successful business so that the profits will shoot through the roof and hopefully after a successful time in business, the VCs will look into investing in my business. As an example, Steve Shank, who built Capella University, decided to use his own savings and angel funding to reach a level of credibility before he sought VC. At that time, he was able to select the right one from multiple VC funds who were interested in financing his business (Rao, 2013).
Works Cited
Rao, D. (2013, June 22). Why 99.95% Of Entrepreneurs Should Stop Wasting Time Seeking Venture Capital. Retrieved from Forbes:https://www.forbes.com/sites/dileeprao/2013/07/22/why-99-95-of-entrepreneurs-should-stop-wasting-time-seeking-venture-capital/
QUESTION 3=
"Venture Capitalists and Angel Investors" Please respond to the following:
• Venture Capitalists (VCs) need deal flow, which often comes from angel investors. Yet, information in the textbook makes it seem like VCs often dislike angel investors. Examine the reasons for potential conflicts between angel investors and VCs. Propose two ways to mitigate these conflicts.
• Determine three ways that conflicts between angel investors and VCs can impact the operations of a start-up company. Assess the impact that conflicts might have on the value of a business in its early stages.
Question 4=comment
• Venture Capitalists (VCs) need deal flow, which often comes from angel investors. Yet, information in the textbook makes it seem like VCs often dislike angel investors. Examine the reasons for potential conflicts between angel investors and VCs. Propose two ways to mitigate these conflicts.
Angel investors and VC'S conflict within their work of business. Angel investors invest in small start up companies and so do VC'S, so they most likely compete for these start up companies and hope to land the deal before the other does. I think a way the two funders can mitigate this is by helping one another out, not all start up companies that pitch their ideas to angel invested get invested, there could be some type of number they are off by, or their idea is not what they or looking for, vice versa and etc. What the angel investor can do is tell the business owner to pitch their idea to a VC, and the same when people are not invested into when they pitch their idea to a VC. This way they give the business owner two opportunities to get funded, and most likely on of them hit a great deal, and it continues on as the two work together.
• Determine three ways that conflicts between angel investors and VCs can impact the operations of a start-up company. Assess the impact that conflicts might have on the value of a business in its early stages.
The goal can be blurry due to negative conflict
The funder may take their eye off of the company and not realize it is failing
The funder may want to set the goals too high to surpass the other
If the company numbers start to hit below the good standing mark and no one is paying attention this could be a big lost for the funder and the owner.