Raising Venture Capital

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I get the question all the time from people that are considering raising venture capital asking what venture capital investors look for in a company. As an expansion stage venture capitalist investing in software and internet companies, I generally stick to what I know and tell them what we look for (just to be clear, earlier stage venture capital investors and later stage growth equity investors each have very different criteria and individual venture capital companies also each have some uniqueness to their criteria). Our basic criteria:

  • Need to be at the expansion stage (have a product, some customers and a economically viable distribution approach, which generally means $500k to $3 million in quarterly bookings for most companies)
  • Happy customers (even better are evangelizing customers)
  • Solid historic growth
  • True competitive advantage (long term sustainability is even better)
  • Low enough current and anticipated competitive intensity in the market sector
  • Large enough market to grow a solid company
  • Company exit strategy that has several options (the more the better)
  • Team that really wants to build a great company long term
  • Solid Core team that has the skill and passion to build the company and get to long term and reach the company exit strategy

If you are raising venture capital and interest in a venture capital investment, this is at least one set of criteria that you could consider aiming for as you reach the expansion stage.