Some Venture Capital Tips for Investors and Startups

By Staff Writer

Feb 02, 2016 07:40 PM EST

Startup companies need funding to grow its business, and venture capital firms provides it. More startup companies arise and provides opportunities for venture capital to invest in the most suitable startups and create a perfect match. Here are some tips for venture capitalism compiled from various experts.

Ryan Holmes, CEO of HootSuite shared his experience in The Entrepreneur about his first experience in dealing with venture capital firm, and provided useful tips for entrepreneurs.

His first tip is to flip the script, which he explained as, "Many entrepreneurs are intimidated by the prospect of meeting with investors. But VC firms aren't doing you a favor by meeting. Their whole purpose is to deploy capital -- in fact, they're losing money if they don't."

He explained second one as cast the wide net. Meeting a variety of investors, and don't try to get funded on the first meeting, and take time to build relationships. While the third tip is to avoid complex deal structure, because the harder a deal is to decipher, the more likely the entrepreneur will be left holding the bag a few years down the road.

Holmes closes his tips with keeping the expectations in check. It is because he wrote, " Lots of VCs will promise you the moon -- hands-on guidance, special insights, strategic help, etc. But once their investment is locked down, many turn their attention to the next big thing."

With his experience building HootSuite since 2009, and dealing with more than 10 venture capital firms invested in his company, Ryan Holmes has more than enough experience to share. HootSuite has a $246.9 million valuation from 4 rounds of funding, and the Vancouver-based company has acquired 9 companies since 2010 to integrate into its tech arms.

Another post in Huffington Post Blog wrote an interesting topic about Ivy Capital Management, the first corporate-backed investment fund started by David Zhao, Jeff Sheng, and Michael Cheng. All of them are still students at the University of Pennsylvania with extensive entrepreneurial backgrounds.

Ivy Capital Management has raised a $500,000 capital to start a fund that could be mutually managed by students at various schools across the United States.

In the investors perspective, Startup Smart provides tips for novice angel investors before start putting their money in startup companies. Starting from using porfolio approach and followed by preparing follow-on investment, and also to see startups from multiple perspectives.

Startup Smart also suggested novice investors to include startup accelerator programs in selecting startups. Then follow the lead from successful entrepreneurs that have now become venture investors. The last tip is to let the venture fund managers, as the professional investors to do their job in selecting best match for startup companies.

With increasing number of startup companies and venture capital firms, it is important to learn the tip to find a perfect match. Tips from seasoned entrepreneurs and investors provide a good guidance for either startups and investors.

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