Securing Venture Capital

Prior to the dot-com bust that occurred at the end of the 90s, all a startup needed was an innovative idea and the possibility of an initial public offering (IPO) in order to secure funding from either a venture capital fund or an angel investor. Since the bubble burst, investors have become a bit shrewder, trying to measure several fundamentals such as leadership, market potential, and growth strategy before investing in a startup company.

With this shift entrepreneurs and people running startups have been forced to go back and become more skilled in the craft of securing venture capital. Gone are the days like those seen in the early 90s. Days when entrepreneurs with ideas like Marc Andreessen met venture capitalist John Doerr who is a partner at Silicon Valley titan, Kleiner Perkins Caufield and Byars secures a five million dollar investment with little more than a software program and a slogan of how this one program will change the world. That is all Andreessen had as a college student at the University of Illinois. That investment based on a program called Mosaic that was later renamed Netscape.

Prior to the crash, anything relating to technology was an idea waiting to be funded. Venture capitalists and angel investors were drooling and climbing on top of each other in order to get the next big thing. Multi-million dollar investments in startups like Netscape, Yahoo, Google, and Amazon.com became billion dollar equity holdings on the day shares in the stock went public. Today, initial public offerings happen far less frequently. It is more likely in today's environment for a startup to be acquired by a company and the investors receiving sizable stock shares in the acquiring companies.

With the landscape changing, entrepreneurs must now do things differently in order to have any real chance at securing venture capital. There are four essential elements or stages a startup must have are: a plan, prospects, a solid pitch, and much patience.