Finding the Best Venture Capitalist for Your Business

Before approaching a venture capital firm, you should have a clear understanding of what you want to achieve. You are obviously looking for money to help expand and grow your business, but what other resources does your business need to take the next step? Do you need practical guidance from seasoned executives that have a deep understanding of your company's industry? Do you need help networking so that you can enter into business development or partnership arrangements with other companies? Do you need help recruiting people to complete your management team?

In addition to providing capital, venture capital firms can provide you with access to a host of additional resources to help make your company successful. Because firms are made up of investment professionals who often have specific industry or operational expertise, it is important to know what sort of resources you are looking for and then do some homework to make sure that you are approaching venture firms that are the best match for your company.

Word of mouth is typically a large determining factor in deciding which venture firm you should approach. Ask friends, family, and people you have a professional relationship with — your lawyer or accountant, for example — for recommendations. Because it is very difficult to get access to a venture firm without a contact or a referral, start your search here.

If you are starting from scratch, you may want to check out the National Venture Capital Association. Their Web site has a comprehensive list of links to venture capital information. In addition, there are links to regional and special-interest venture capital organizations and firms.

Beyond targeting a venture firm and its investment professionals by industry expertise, it is also important to take your company's development stage into consideration. Are you in an early stage of development? Are you looking to go public? Some firms concentrate their investment efforts on companies in specific stages of development, while others are willing to invest in all stages of a company's lifecycle.

Finally, some firms prefer to work with companies in a particular locale — often close to their offices or an industry center, such as Silicon Valley. Make sure you take this into consideration when targeting firms as well as considering whether you want to develop a relationship with a firm that is located outside of your particular geographic region.