Where is Venture Capital Headed?


While entrepreneurs looking for funds should be aware that venture capital is hard to get, the number of deals closed is declining. Here are factors that are shaping the venture capital industry and are likely to impact investments in the future.
VC funds raised a lot of money in 2016
One development that accounts for the recent drop in venture capital activity is the degree to which venture capitalists fundraised last year. They raised $41.6b cross 253 funds. This indicates that investors may become more active in the future.
Investors are more likely to invest in frontier tech
Virtual and augmented realities, artificial intelligence, the internet of things, drones, fintech, and 3-D printing technologies have been hot topics for years. It takes time to learn the new technologies, meaning that investors have been taking longer to close deals with startups in these new sectors.
Many VCs have not been able to cash out
While late-stage, early-stage and angel/seed activity declined last year, so did the exits. Whereas interest in new investment opportunities and last year fundraising might increase earlier stage activity, the late stages of venture capital life cycle are still backed up. A sluggish exit market is keeping more funds locked away than ever before.
Inside the Q2 2017 global venture capital ecosystem


The Best 5 Venture Capital Experts

For a majority of start-ups, acquiring venture capital is an essential tool in making a business stand on its own feet. Without obtaining the best advice from the experts on venture capital, raising it can be an uphill task for a new entrepreneur. The following are the best five venture capital experts that you should not only know but also follow on twitter:
Chris Witkowskyn
Chris is an alumnus of Penn State University. Last year alone, he authored over two hundred top-notch articles on venture capital. His expertise in this area of business is simply impressive. Following him on twitter will give you a great opportunity of learning from the expert.

Iris Dorbian
Being a journalist that focuses on the investment aspect of the business, Iris has published over seven hundred articles on venture capital. A majority of her articles are a must-read for every entrepreneur.

Angela Sormani
Angela is a former employee of Thomson Reuters, a place she worked as a journalist. Currently, she works for Reuters Buyouts. Her main focus is writing insightful articles on venture capital. Most of her articles on venture capital have each generated more than 1500 shares.

Michael Dempsey
Michael is one of the most influential people in the investment industry. His stories on venture capital are very informative and, therefore, worth reading. His articles are focused on making the reader make investment decisions that guarantee success.

Yves Smith
Yves is a veteran in the financial services industry. Most of the stories featured on her blogs focus on venture capital. Her stories are highly popular and generate an incredible 7,055 shares per story on average.

Three Misconceptions About Raising Venture Capital

Raising capital for a business can be an uphill task. It does not matter whether the financial markets that you are exposed to are liquid or not. Without a plan or strategy, raising venture capital is almost impossible. The following three common misconceptions entrepreneurs have when trying to raise capital for their businesses:
Most capital is generated when the company is at the start-up stage
Most investors prefer companies whose business is growing or has grown. A company that is already in the market and has high prospects of success is attractive to investors than startup whose future is unknown.

Taking corporate venture funds indicates your company will be bought
A common misconception amongst entrepreneurs is that when a company invests in your company, there are higher chances of the investor company taking over your company. It is important to note that that rarely happens. In fact, corporate venture capital is one of the best ways of raising capital.

Venture capitalists are only focused on the exit strategies
Most entrepreneurs believe venture capitalists are only focused on the exit strategies. However, many venture capitalists want to be part and parcel of your business. They know that as the business grows, the return on their investment also grows.



Financing Your Startup Using Venture Capital

There are various ways of financing a start-up; one of them is through the use of venture capital. There is a process that one needs to follow when raising capital using this method of start-up financing. This process can take between forty to ninety days depending on how fast an individual can get things done. The following are the various stages one must go through:

1. Come up with a term sheet

In this stage, a term sheet is drafted. The term sheet should indicate all the terms that will govern the whole investment into the company. It should also outline every detail of the company as far as that particular investment is concerned and the conditions for the relationship between the interested investor and the company.

2. Conduct a due diligence

At this stage, the investors conduct a due diligence of the company so as to ensure that they are making the right business move in investing in the company. The company should have a potential of high returns on their investment.

3. Execute definitive agreements

In executing the definitive agreements the term sheet automatically ceases to operate. Both parties must execute these agreements. Definitive agreements vary depending on the finance method the company has chosen.

4. Ensure fulfillment of the conditions precedent

The company then ensures that it has fulfilled all the conditions precedent to the closing of the investment deal. This stage is of interest to the investor so as to ensure that the company has acquired all the approvals for the investment.

5. Ensure closure

At this stage, the deal is closed. The investor delivers the agreed amount of funds to the company.




Advice of Three Venture Capitalists to Entrepreneurs

Pitching VCs can be a fraught enterprise, especially for people who have never done it before. Today, we have some advice from leading venture capitalist at firms such as GE Ventures, FirstMark Capital, and Andreessen Horowitz.
Ask for feedback from various sources
According to Sue Siege,l CEO of GE Ventures, innovation is hard, particularly when an individual tries to do it alone. Therefore, when building your board and core team, look for people with various experiences and backgrounds. Looking for help from a wide range of expertise and personalities will help you think of almost everything, leaving no stone unturned.
Invest in quality salespeople.
Lars Dalgaard, General Partner of Andreessen Horowitz, believes that salespeople are people constantly in front of your customers. They visualize the market like no other person and can give you competitive insights for the overall strategy of the company. Therefore, every entrepreneur should invest in a quality salesperson.
Tell your own story convincingly
Whether you are fundraising, recruiting or interacting with customers, you are always selling. Therefore, you must be a master storyteller. Ensure you have a genuine and compelling company story that not only resonates with your audience emotionally but also intellectually.

Reasons Start-ups Struggle to Raise Venture Capital

It’s great time to own a company. All over the world, the number of seed rounds is increasing. Despite an increase of people willing to invest in various companies, some entrepreneurs are still struggling to raise venture capital. Here are reasons why venture capitalists may be saying no to your company.
There are many reasons why venture capitalist decline to invest. Most of these reasons may have little to do with the quality of your products or services. Venture capitalists may feel they have enough investments in a given industry. They may also see the opportunity as too similar to an existing investment. Also, the opportunity may be outside of their expertise. Therefore, before you start looking for a venture capitalist, it is a good idea to do good research. Make sure that the venture capitalists you are targeting are well grounded in your field.
Many young companies believe that building a successful feature attract large companies. Although this can work, these types of projects do not attract venture capitalists who are interested in the potential of large outcomes.
Raising capital takes energy and time. They may be better ways to fund your company other than venture capital. Before you go for a certain type of funding, take the time to understand what a given venture capitalist considers before investing.

Difference Between Corporate VC and Institutional VC

Financing that investors provide to small businesses and start-ups is known as venture capital. In other words, venture capital is an alternative source of support and funding for entrepreneurs raising capital. For entrepreneurs who want to raise capital through venture capital firms, it is important to differentiate between corporate VC and institutional VC.
Corporate venture capital is the investment of corporate funds in external start-up companies. On the other hand, Institutional venture capital is managed funds under management to invest in start-ups with high-growth potential. The goal of both Corporate VC and Institutional VC is to invest in high-growth businesses that drive value for the company.
Corporate VCs have strategic objectives. They invest in partners that drive tighter relationships to the company. Institutional VCs tend to invest for financial returns.
Corporate VCs prefer investing in early to mid-stage companies. In institutional VCs, investment stage preference varies, from idea to late stage companies. Institutional VCs can build strong teams for financial success in any stage.
Due to accounting implications and fiduciary responsibilities, Corporate VCs do not strive for tight control. Typically, they prefer a board observer role instead of a seating role with a vote. On the other hand, institutional VCs control over their portfolio investment.