Venture Capital (VC’s)

Venture Capital firms create funds which are then used to invest in a portfolio of companies. Each fund will have a size (in dollars) and a duration (in years) after which it is expected that the fund will return to its contributors, a return on the investments it has made.

VC’s expect that many of their investments will fail to provide decent returns, so will include some high risk, high reward options amongst some more calculated risk investments. But they expect to liquidate the fund at a specific point so are expecting that the portfolio companies within them either achieve an IPO or are bought out before the fund matures. Companies that remain privately owned cannot produce a capital return for their investors as trading in private shares is extremely limited.

VC’s are therefore very interested to understand the trajectory of the company and the risks associated with its business plan. In early rounds, the founder or management team profile is still very important (the team has to show that they are capable of delivering the business plan), but the VC is evaluating the company on a financial level rather than the more emotional attachment to the concept, product or personnel that can influence Angels in the earlier stages.

Vc’s tend to invest in companies that can show commercial success, although some will speculate on companies with evidenced market traction. Investments are typically in the $2m to $5m range, and most funds will have a sector focus. Some VC firms also restrict the sectors that they are comfortable with, others are more agnostic. When looking to approach a VC firm, research whether they have an open fund applicable to your business (sector and duration to exit) and who the key contacts are. Most of the are active on media channels

Airtree have shared a list of over 130 active VC’s together with their sector and stage focus, typical investment (cheque) size, and contact details.