Finding a VC Firm that's the Right Fit for You

Posted on 11/01/2021 at 12:00 AM by Ashley Hunt

Finding a VC Firm that's the Right Fit for You

Working with a venture capital firm can be extremely beneficial for startups that are looking to grow and scale. If your startup is ready to take the next step and acquire capital, congratulations! 

It's important for startups to be intentional in the venture capital firms they work with. The right VC firm will bring more than money to your company. Often, raising money can be less important than who you are raising money from. The right founder/investor relationship can result in high growth and opportunity, while the wrong relationship can bring additional hurdles to an already difficult entrepreneurship journey.

What should your company prioritize when working to secure venture capital?

Industry Experience

Your VC firm should understand what you do. Look for a firm that has experience making investments in companies like yours, whether that be within your industry or with companies that have similar approaches. When your investor is excited about your products or services, they’ll be excited to bring in new ideas, offer advice, and support your endeavors. While some firms might invest in startups based solely on track record and founder experience, a VC firm that has industry experience can truly propel you to growth. Investors with relevant experience bring in a new and unique perspective on what it takes to succeed in your industry. Find an investor that not only has the experience, but has an intuitive sense of your services, products, customers, and industry.

Commitment and Availability

A new company is bound to have ups and downs. A committed VC firm will be supportive in the most profitable times, and the most challenging. There’s nothing worse than a venture capital firm that gives up too easily – checking out at the first bump in the road.  You want to find an investor that is committed to long-term success. Some VC firms will serve as extended members of your team, while others will have limited involvement. You’ll want to find a happy medium between being overbearing and having no involvement. Consider the level of availability you desire from an investor. Your best bet is to find a VC firm that will be dedicated to giving you the advice you need, while also letting you operate your company in alignment with your values and on your terms.

Emotional Intelligence and Leadership Qualities

Tensions aren’t uncommon in any company, but especially in new startups. Finding a VC firm that will know how and when to mediate will help minimize bumps in the road and help your team glean valuable lessons from hardships. A good VC firm will do a lot of listening and asking, looking for insight from multiple points of view and bringing solutions to the table when appropriate. Unfortunately, politics are inevitable in organizations of all sizes; groups of ambitious people bring along egos, rivalries, mistakes, different opinions, and so much more.  Finding an investor that isn’t afraid to make difficult decisions, and knowing what needs to be done will prove invaluable. 

Past Success and Track Record

It's important to take a look at the past deals your VC firms have participated in. There’s a popular saying that success breeds success. Looking at the numbers is crucial to gaining insight into the potential for success in your partnership. That said, the past wins and numbers aren’t always relevant to future wins. It’s important to take into consideration quality over quantity. A prominent investor might bring in more connections and larger numbers of successful deals, but you may find a lesser-known investor who has more relevant experience and connections.

 Connections

Most startups won’t just raise capital one time. As you approach future rounds of funding, a good VC firm will be able to introduce you to major players that can help you secure future funding. In which spaces are your VC firms playing in? Who do they already invest in? Work with? Win with? Many times, this will all come back to industry knowledge and experience. If you’re a fintech company, you’re going to want to work with a VC firm that has already been successful in the financial services space.

The Right Fit Matters

Finding the right VC firm will be paramount to the success of your company. Don’t just focus on big names and flashy numbers. The right investor will have values, priorities, and resources that align with yours. The best investor brings much more than financial resources to the table – they will bring sound advice, the right networks, ability to scale, and industry experience. A bad match in an investor/founder relationship can bring unnecessary hurdles. A company that values long-term, slower-scale growth will likely not mesh with an investor that prioritizes an aggressive, rapid business model.

Your partnership is a two-way street. While it’s imperative you find the firm that is the right cultural fit,  a VC firm also wants to find a startup that makes sense for them. Remain mindful of your values and goals, and find an investor that aligns with you.

Next Level Ventures is excited to work with innovative companies in the Midwest and in the fintech space. Reach out to us today to see if our firm is the right fit for you.