Tuesday, July 14, 2015
Understanding Whether Icon Ventures Will Work Out With Your Business
Being blinded by funding is one of the worst mistakes a startup can make. indeed, the funding is a must in order to get going, but it is essential to have a positive relationship with the venture capital firm as well. Many entrepreneurs fret over this wondering whether the venture capital firm they are talking to is the right one. Are they going to provide value in the short and long term? Here are five key tips to follow in order to better understand whether the venture capital firm you are considering is the right fit.
Assess Their Expertise
it is important to filter out the rubbish options as soon as you can. The finest way would be to take a look at their portfolio and see their area of expertise. For example, if you are running a technology startup, you are going to want someone from the industry who has funded other businesses in the same niche.
This does not mean other firms are bad, but the relationship might not be as fluent as it should be.
Gauge Their Interest
How can you be aware of a firm being a poor fit well in advance? The best option is always going to be to go ahead and get a feel of their interest. Give them time to get back to you. Are they intrigued by what your company has to offer? Do they truly appear enthused?
Gauging their interest is a wonderful way to filter out the firms who are only going to waste your time.
Getting money from such firms is a waste as they are only pumping in money, but nothing else of real value. These relationships always turn out poorly as they truly don't care about the business or what it represents. For them, it becomes nothing more than a money making machine.
Forced Recommendations Are A 'No No'
Let's imagine you have sat down with a firm and its representatives for the first time. You list out what you are going to do and they point out concerns they might have. This is fine as you are getting a feel for one another. However, when they start to force "recommendations" (i.e. demands) down your throat, it is time to give up on the deal and walk out.
These forced recommendations are a sign of a downward spiral right around the corner for your business. Avoid firms who start off with such extravagant demands. It is simply not worth it and will push your business down the hill.
Impatience Is A Major Warning Sign
A major warning sign will often come in the form of impatience. Are they looking to put pen on paper right away for everything? Do they seem impatient about how you are viewing the progression of your company?
This is one of the worst relationships to be in for a business. If the venture capital firm is immediately starting to show signs of impatience when you speak with them for the first time, it is time to abort immediately.
Don't seek further appointments with such firms as things are only going to get worse as time goes on.
Where Are They Located?
The best place to begin would be location. If the venture capital firm is not located close to the company, it is rarely going to work out as desired. It is fine for an established company to receive funding from other locations around the world, but for a startup, this is the wrong approach.
If they are located far away, the relationship is going to be awry at best. It is not going to be as smooth as possible with communication gaps developing over time.
By focusing on the factors listed here, you should be well on your way to making sure you are ahead of the game in essence. You will be able to pinpoint the right firm for you and your business. This will ensure there are no hiccups along the way. When a startup is able to get funding from the right firm, the rest becomes that much easier to negotiate. The wrong firm will ruin a company regardless of how much money they are pumping into the business.