The most important thing to remember about Venture Capitalists
The Most Important Thing to Remember About Venture Capitalists – Many of the challenges that arise when taking a new concept, product or service to market come when two or more different business and personal interests have to align to get something done. I will never forget a conversation that I had with a venture capitalist (VC) at a networking event that really brought this home. He had just finished speaking with someone many would consider a ‘seasoned CEO’ who was actually looking for venture investment for his company. In our chat the VC shared that he would never invest in the company.
Here’s what happened. During the course of the conversation the CEO said something to the effect that he was eager to get these money matters out of the way so that he could focus on achieving his company’s next targets. Now this seems innocent enough until you hear it from the point of view of the investor. The exact words he used were ‘money is my business’. What the CEO dismissively referred to as ‘money matters’ actually constitutes the entire business of what a venture capitalist does. With that one phrase he communicated that there were several things more important t him than what was most important to the potential investor he was talking to which simply put is how his company and management team would strategically and competently manage the money that his firm provides to generate a healthy return on their investment.
If you happen to be in a position of needing venture capital, as many cleantech companies do at some point, it would be helpful to go into a conversation with a VC thinking about your business as a service that enables that VC’s firm to trust that their investment will not be squandered and will return 20 times the value of the investment in about 5 years. Your chances of success will be much higher if you show that you understand the role and responsibilities of your company in this important relationship and if you show that you care about their business as much as you expect them to care about yours.