The Three Stages of Venture Capital: Sourcing, Validating, Following
The business of venture capital has three primary phases for investment. Sourcing the deals, validating the company, and after investment following the company.
Integrity | Personality | Passion | Persistence | Business Judgment | Financial Sophistication | Creativity
To create and maintain valuable contacts you must be liked, knowledgeable, and trustworthy.
Arizona | Nevada | Colorado | Utah | S. California | Georgia | N. Carolina | Washington DC | New Mexico | Texas
Look for value in growing markets, but don’t ignore traditional markets.
Leverage personal and professional relationships | Establish connections with active members of tech communities | Utilize TWC Portfolio Companies and EIRs for introductions | Talk with other Seed and Series A VCs
Maintain regular dialogue with key sources, ask for introductions, and utilize multiple mediums of communication.
PRESENCE | NETWORKING
Attend startup, tech, and VC events | Participate in startup/VC competitions | Organize events | Impart knowledge and give back
Be present, active, visible, and participate in the Entrepreneurial Ecosystem.
Social Media presence | Develop relationships with journalists | Website with resources for entrepreneurs | White Papers | Regular blog content
Keep yourself in peoples minds and establish yourself as a thought leader.
Knowledge | Experience | Informed | Inquisitive | Aware | Gut Feeling
Utilize experience and knowledge to quickly assess potential.
Market Validation & Analysis | Industry Attractiveness | Product & Solution | Business Model | Risk vs. Talent |
Presentation Quality | Funding Readiness | The Ask
Create a rubric to score potential companies that pass initial review.
Regular prospect reports for Investment Committee | Standardized report format |
Create a standard easy to digest prospect report for committee feedback.
Meet with prospective companies | Talk to Founders, Management, Advisors, and Staff |
Face time with people is the most important step. Get to know and understand the people.
Reference Calls | Interviews | Research Competitors | Analyze Financials | Question Assumptions
Question everything. Check facts and figures. Play the devil’s advocate.
In Person | Email | Phone Calls
Maintain regular communication to understand company’s needs, hurdles, and risks.
Knowledge | Insight | Introductions | Support
Teach what you know and learn from your talent. Get your hands dirty.
Data | Analysis | Goals | Milestones
Create company specific metrics for measuring success. Check and update them regularly.