Taking Advantage of the Changing Venture Capital Scene
Start-up companies have traditionally been out of luck when it comes to scoring venture capital funding, but the VC landscape has seen some definite shifts in the past few years. Now entrepreneurs just starting out may have more financing options than ever before.
The progression of technology is helping to make venture capital investment groups more attractive and easier to form. Investors can come together from different parts of the country or even the globe and meet together as often as possible with online tools like Skype or Google Hangouts. More and more of these investment groups are created every month, coming together from all sorts of backgrounds, college alumni groups, city municipality investment groups, environmentalist groups. And it all spells good news for brand-new businesses looking for venture capital.
In 2014, U.S. corporate VC groups invested a total of $12.31 billion into businesses, according to VC data firm CB Insights, and even more was contributed in 2015. With so much capital to go around, some groups have started branching out to find start-ups with great potential or new businesses that fit their philanthropic profile.
Entrepreneurs who are hoping to secure some venture capital funding from these groups should be aware that there are almost always terms and conditions attached to all that money. Sometimes, they are things like having to stay put for a year or two before having the option to move the company elsewhere, or sometimes group require certain ‘green’ standards to be met. New firms need to be clear on the terms and make sure their goals align with those of their investment group.
And it is true that startup tech companies often get the bulk of VC funding from these alternative investment groups. That’s because they have very few financial barriers to get started and they often attract young, less-expensive employees. Still, other startups may have a better chance today at finding VC help than even five years ago. And understanding that fact may make all the difference.