This is How VC Firms Can Help You
in Startup Funding
VC firms or Venture Capital firms have existed from the time
startups required seed capital to get the ​funding support​. These
organizations are identified to support business at many stages. VC
firms contain a set of companies that are willing to offer money to
startups which are all set to get into the market. Earlier, VC firms
have supported several startups that we know now as one of the
biggest players in their industry. Still, the question of ​how VC firms
help in startup funding remains unanswered. In this guide, I will
throw some light on how VC firms can help you in your startup
funding.
How VC Firms Can Help You
Two key aspects play a crucial role when it comes to VC firms
funding your startup​. The two key aspects are limited and general
partners. General partners are the individuals who are involved in
managing communication between startups and investors. They
are responsible for initiating and making terms and agreements
successful among both of them. Limited partners are all the
investors or investment bodies that will provide money in the form
of seed capital to the startups. However, the organizations offering
seed capital could or couldn’t be the partner of VC firms. This
makes VC firms unique from other types of investors.
On the other hand, startups should be able to convince VC firms to
offer money to them. Startups should have certain qualities that
make them appear as a golden choice of investment. VC firms are
very good at making profitable investments in these startups. Due
to such ability, they are able to profit both the limited partners and
startups.
How Venture Capitalists Earn Money
These organizations could have a vast amount of money to make
startups successful. There are two ways by which VC firms can
make money.
● Management fees- The management of startup assets by the
professionals could have some expense. This expense comes
under the management fees. The management fees are paid
at 2 to 3 percent of capital gained from VC firms.
● Carry- Carry is defined as the profit or share given to the
investors after the investment is made successfully. Lots of
money is earned by Venture capitalists with these profits.
Influence of VC Firms On Startups
Startups have always benefited by taking help from VC firms. I also
mentioned before that some of the tech startups emerged as global
players in the market. The general partners could be professionals
that are ready to help startups with other resources besides ​seeking
VC funding​. These professionals generally have a network that
could include other successful entrepreneurs and angel investors.
Startups should also know that VC firms have a life span of 10
years. After that, they will try to look for the exit plan. However,
these organizations could help startups indirectly. VC firms are a lot
busy while seeking other better investment opportunities.
List Of Top VC Firms
After you have understood how VC firms help startups, it’s good to
know about some of the best VC firms operating around the world.
● Accel– It is an organization that is active from the very
beginning. The firm has supported companies such as
Facebook, Braintree, and Dropbox. Accel is an expert in
understanding the strengths and weaknesses of the
entrepreneurs.
● Andreessen Horowitz- It is a VC firm which is located in
Silicon Valley. This organization has invested in OfferUp,
Everlaw, Allset, and so on.
● Benchmark- It is a VC firm that is mostly interested in tech
startups. Some of the startups it has supported are Digits,
Docker, and Modern Treasury.
● Index Ventures- This VC firm has shown interest in technology
and biotechnology. Some of the startups it has invested in are
Fast.co, Collibra, Double, and so on.
● Sequoia Capital- This VC firm has its offices in several major
countries. It has helped startups like Tecton.AI, Knowde,
Limbix, Robinhood, etc.
● Bessemer Venture Partners– Bessemer is located in New
York. This VC firm has invested in Okera, Shippo, and Axonius.
● Founders Fund- This organization is located in San Francisco.
It has invested in PsiQ, Motherly, and SpaceX.
● GSV Capital- GSV Capital has mainly focused on China and the
U.S.A. The VC firm has invested in Coder, EOI Technology, and
Frubana.
To Sum Up
Until now, you would have known how VC firms can help you in
startup funding. You should always approach them, as these
organizations are always available to provide funding for new
startup companies​. If you have a better business plan, investors will
always come to support you. VC firms have the power to make your
startup a successful player in the market. However, care should be
taken while agreeing with the terms and conditions. Don’t allow
investors to take a larger percentage of stake in your organization.
You can play safe by clearing all the doubts from the very
beginning. Doing this will always be beneficial for your startup at
the present and in the future.
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