Most startups have a problem when it comes to raising enough capital to hit the ground running. There are many ways you can raise capital for your startup including taking bank loans, personal savings and crowdfunding among others. The media loves to highlight unicorns that become billion dollar startups partnering with VC firms. Despite what the media leads us to believe only 1% of startups are funded by venture capitalists.
Venture capitalists are institutions that pool investors’ cash and loan it to startups that have exceptional long-term potential with high upsides. Venture capital is very important for startups that cannot access other traditional forms of funding due to the high risk (which comes with high returns) of early-stage investing. The greater the risk the more equity venture capitalists will require to finalize an agreement and they might also ask to be included on the board.
Seed financing is a common form of financing that is provided to entrepreneurs to help in the early development of a particular product. The financing usually involves a modest amount of capital. The seed financing may also be used for market research, building a management team and gaining traction. Seed financing often ranges between $100,000 to $1.5 million.
When a venture capitalist invests at the seed stage they also offer expertise in areas of management, marketing, research and development for the startup.
This is common for businesses that have started their operations but have not started the commercial manufacturing and delivery of their products. The funding is meant to help businesses scale up their capabilities.
Startup financing is meant to assist firms that have assembled a team and have started product development. Most companies at this stage have started making revenue, but costs are still pulling them down. First stage capital gives a boost to companies that have already done well selling their product but need help scaling their production.
Apart from offering cash in return for equity, Venture Capitalists are very helpful in mentoring entrepreneurs in various aspects of business. They help in the composition of the management team and selection of business partners in marketing and management. Moreover, they also sit on the board to ensure that the startup has the mentorship it needs when passing critical decisions.
Venture Capitalist have some of the best individual blogs you will find online. They are worth following and signing up to their email lists. The information they provide whether you are currently looking for investing or not is invaluable. Here are the ten best.
#10 Jalak Jobanputra
A venture capitalist who has lived in worked in or visited close to 40 countries. In her travels and business dealings, she has discovered more commonality than differences in human beings. From aspiring women entrepreneurs she trained in Tanzania, the farmer in rural India or an artist in Burma, to the seasoned and successful entrepreneur in Silicon Valley.
In 2007, she made her first angel investment. Since then, her portfolio has grown to include more than 90 companies. She also focuses on female entrepreneurs — a decision that is more practical than philanthropic. Women founders tend to be tenacious and thorough. They ask questions and listen. They are great leaders. Her female founder thesis led Joanne to create The Women’s Entrepreneurs Festival. This event is an incredible combination of inspiration, information, and validation.
Charlie O'Donnell has been an active member of the NYC startup community for over a decade. He is the sole Partner and Founder at Brooklyn Bridge Ventures. The fund makes seed and pre-seed investments and was the first venture firm located in Brooklyn, where he was born and raised. Brooklyn Bridge invested in the first rounds of Canary, Orchard Platform, Tinybop, Hungryroot, Clubhouse, Ringly, and goTenna among others.
He has venture experience at two of the top firms in the country, Union Square Ventures, and First Round Capital. He sourced First Round's investments in GroupMe (acq. by Skype), SinglePlatform (acq. by Constant Contact), and Backupify (acq. by Datto), as well as Refinery29 and chloe+isabel.
#7 Hunter Walk
Before Homebrew, he led consumer product management at YouTube, starting when it was acquired by Google. He originally joined Google in 2003, managing product and sales efforts for AdSense, Google‘s contextual advertising business. His first job in Silicon Valley was the founding product and marketing guy at Linden Lab.
Tomasz joined Redpoint in 2008 and has invested in Axial, Dremio, Expensify, Electric Imp, Looker, and ThredUP. He is an active blogger and is a co-author of Winning with Data which explores the cultural changes big data brings to business and shows you how to adapt your organization to leverage data to maximum effect.
#5 Bill Gurley
General Partner at Benchmark for over 10 years. Prior to Benchmark, he was a partner with Hummer Winblad Venture Partners. Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS First Boston focusing on personal computer hardware and software. Research coverage included such companies as Dell, Compaq, and Microsoft, and he was the lead analyst on the Amazon IPO.
#4 David Skok
David is a serial entrepreneur who founded a total of four companies and did one turn-around. In 2001, he joined Matrix Partners, who had backed his last two startups. His successful exits as a VC include - HubSpot, JBoss, AppIQ, Tabblo, Netezza, Diligent Technologies, CloudSwitch, TribeHR, GrabCAD, OpenSpan, and Enservio. David currently serves on the boards of Atomist, CloudBees, Digium, Meteor, Namely HR, Salsify, and Zaius.
David writes a blog for entrepreneurs and startups on topics such as viral marketing, SaaS metrics, building a sales and marketing machine, techniques for lowering cost of customer acquisition, etc.
#3 Brad Feld
Brad has been an early stage investor and entrepreneur since 1987. Prior to co-founding Foundry Group, he co-founded Mobius Venture Capital and, prior to that, founded Intensity Ventures. Brad is also a co-founder of Techstars.
In addition to his investing efforts, Brad has been active with several non-profit organizations and currently is chair of the National Center for Women & Information Technology, co-chair of Silicon Flatirons, and on the board of UP Global. Brad speaks and writes extensively on the topics of venture capital investing and entrepreneurship.
#2 Fred Wilson
Fred Wilson has been a venture capitalist since 1987. He currently is a managing partner at Union Square Ventures and also founded Flatiron Partners. Fred has a Bachelors degree in Mechanical Engineering from MIT and an MBA from The Wharton School of Business at the University of Pennsylvania. Fred is married with three children and lives in New York City.
#1 Paul Graham
Paul Graham is a programmer, writer, and investor. In 1995, he and Robert Morris started Viaweb, the first software as a service company. Viaweb was acquired by Yahoo in 1998, where it became Yahoo Store. In 2001 he started publishing essays on paulgraham.com, which in 2015 got 34 million page views. In 2005 he and Jessica Livingston, Robert Morris, and Trevor Blackwell started Y Combinator, the first of a new type of startup incubator. Since 2005 Y Combinator has funded over 1000 startups, including Dropbox, Airbnb, Stripe, and Reddit.
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