Venture Capital: Sourcing, Validating, Following

Venture Capital: Sourcing, Validating, Following
Venture Capital: Sourcing, Validating, Following
Posted on August 21, 2015 in Uncategorized

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.

SOURCING

KEY CHARACTERISTICS

Integrity | Personality | Passion | Persistence | Business Judgment | Financial Sophistication | Creativity

To create and maintain valuable contacts you must be liked, knowledgeable, and trustworthy.

GEOGRAPHY

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.

PEOPLE

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.

MARKETING

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.

 

VALIDATING

EXPERIENCE

Knowledge | Experience | Informed | Inquisitive | Aware | Gut Feeling

Utilize experience and knowledge to quickly assess potential.

RUBRIC

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.

REPORTING

Regular prospect reports for Investment Committee | Standardized report format |

Create a standard easy to digest prospect report for committee feedback.

MEETINGS

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.

DUE DILIGENCE

Reference Calls | Interviews | Research Competitors | Analyze Financials | Question Assumptions

Question everything.  Check facts and figures. Play the devil’s advocate.

 

FOLLOWING

COMMUNICATION

In Person | Email | Phone Calls

Maintain regular communication to understand company’s needs, hurdles, and risks.

MENTOR

Knowledge | Insight | Introductions | Support

Teach what you know and learn from your talent.  Get your hands dirty.

METRICS

Data | Analysis | Goals | Milestones

Create company specific metrics for measuring success.  Check and update them regularly.

M. Preston Clarke is the Managing Partner of Arizona Venture Consulting. Preston has a wide breadth of experience in operational leadership, strategic planning, financial management, business development, research and analysis, client service and marketing as a principal in multiple enterprises. Preston is actively involved in the local and regional entrepreneurial ecosystem and is passionate about helping early-stage companies succeed Preston received his Bachelor of Arts degree in Economics from Wheaton College (Massachusetts) and his Master of Business Administration from the Eller College of Business at the University of Arizona. He resides in Scottsdale, Arizona.

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