Nicole Gravagna - Venture Capital For Dummies

Venture Capital For Dummies

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Copyright 2013 by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

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Library of Congress Control Number: 2013942071

ISBN 978-1-118-64223-8 (pbk); ISBN 978-1-118-78470-9 (ebk); ISBN 978-1-118-78473-0 (ebk)

Manufactured in the United States of America

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Introduction

If you are reading this book, chances are that you own a company or are planning to start one sometime soon. You are probably thinking about raising venture capital. We appreciate that you have come to us in your search for information. Its okay if you dont know a thing about venture capital or private investments at all. We are here to help! We wrote this book for anyone whos considering seeking venture capital. We help nearly 100 companies each year go through the process of seeking investment. All this time, we have been taking notes on what works and what doesnt.

Venture capital and venture capitalists may seem scary and larger-than-life at first. It turns out that VCs are real people, too! In this book, we demystify the venture capitalist so you can get past that all powerful man (or woman) behind the curtain feeling.

Venture capital investment is only one of the many ways that you can fund your company.

Venture capital investment can help a start-up company attain much larger milestones in a much quicker timeframe than it would otherwise be able to do.

Companies that take venture capital get more than money. They also get the expertise of the VCs and VCs network of advisors and business people.

The venture capital track is the fast track. Companies that take venture capital grow large very quickly or are acquired in a few short years. VC-backed companies dont do anything slowly.

After you read this book, you may choose to pursue VC funding, or you may realize that you have other options that better suit your company and your needs. This book can help you grow your company no matter which path you choose.

About This Book

We wrote Venture Capital For Dummies for smart people with no prior experience raising money from venture capitalists. Founders with great start-up companies come to us every day asking for advice, education, and introductions to investors. We used our experience to create this book.

Through our work at the Rockies Venture Club, we found ourselves teaching each entrepreneur the same information about venture capital investments. We thought boiling all that knowledge down into one little book this book would create a handy reference!

Of course, we wrote this book for entrepreneurs, but angel investors, friends of entrepreneurs, and even consultants who help entrepreneurs grow their companies can find useful information here. When everyone in an entrepreneurial community understands the fundraising process, everyone can help support start-up companies.

If you are an entrepreneur, or know an entrepreneur and want to support his or her company, you can find investors. Everyone knows someone who is an investor or knows an investor. This book can help you uncover the investors in your own network.

As you read this book, keep the following things in mind:

We use the term venture capitalist and VC interchangeably, reflecting the way the terms are used in everyday conversation.

The sidebars contain extra information that we think supports the main ideas in the book. You can skip them entirely and still get the full facts.

Venture Capital For Dummies is a reference book that you can read in any order you wish. If you are feeling particularly technical one day, you can dive into the chapters about investment structure. If you are more interested in understanding investor psychology, you can read those parts first. Focus on the stuff you want to know.

Foolish Assumptions

In writing this book, we made some assumptions about you, our dear reader. We guess that you are one of the four types of people that we run into through our work in the Rockies Venture Club. You are probably