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How should enterpreuner go about getting venture capital?

Date: 12/30/2005 | Category: Business | Author: developers

Here is my tip for great blog from Brad Feld, managing director of Mobius Venture Capital. Good reading. This one about if using Investment agent is good idea when entrepreneur is looking for venture capital.

In the early stages, the entrepreneur is by far the best fundraiser for his company and there is a knee jerk negative reaction by many VCs against early stage deals that “requireâ€? an agent. At the early stage, an entrepreneur is much better served by finding an adviser (or set of advisers) or angel investor that has good VC connections and fundraising experience who can get actively involved in the company as adviser, board member, consultant, or even chairman.

As with anyone that you engage to help you with your company, doing your own due diligence and background check on the agent you are considering using is critical. The ratio of charlatans to qualified agents is probably 100:1 – the vast majority of folks that claim to be able to help companies raise capital are pretty useless. The diligence process is easy – ask for a complete list of successful and unsuccessful deals the agent has done in the past 12 months and then dig in to the details of the list, talking to the principals involved in the transaction (including the lead investors that agent brought to the table) to see how much impact the agent had on the deal.

Finally, don’t make the false assumption that an agent will “free up more of your time to focus on execution.â€? This isn’t going to happen – if the agent is good he will help with the process, but the entrepreneur will still be on the front line of the fundraising activity. Any new investor is going to want to hear directly from you. For the period of time that you are raising capital, this should be your primary mission in life (to raise the money you need to continue to run your business) – no one will (or can) do it better than the entrepreneur. Your lawyers, agent, and others will help, but the burden of the financing will almost always be yours.

This is so difficult issue every entrepreneur is facing. Where the attention should be directed? Running the business or getting capital. How can you honestly say you are giving 100% to your business when looking for venture capital. I don’t think there is a way to do both well. I always felt that there is solution to every problem and it might be easier to find the way how to grow the company without venture capital then spending most of the time and energy to finding it. Can there be some way how to put venture capitalist and good projects together in Ebay like environment? Without spending too much time for entrepreneur and venture capitalist trying to find each other? That’s my dream!

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