What a Venture Capitalist thinks?
This article is written by Milambo Kabeleka, a Contributor Author at Startup Turkey.
Venture Capitalists have a very big and essential role to play in the growth and success of a Startup Ecosystem. They are the drivers of some of the big entrepreneurial ecosystems in the world as they not only provide financial Capitalist for startups but also offer mentorship, brand exposure in the market and support for future rounds of finance sourcing for the startup.
As an entrepreneur, it helps to know how to attract Venture Capitalist and better yet, how their minds work. It is important to understand what your investor is thinking, what the investment cycle is and whether your ambitions are aligned exactly with your investor’s.
Venture Capitalist money comes from global institutions that have alternatives to spending it. It can be spent in different industries such as Agriculture, Real estate and early-stage Venture Capitalist is the most unpopular asset class in the world. Money for Venture Capitalist is very hard to find. This is why Venture Capitalist will only invest in disruptive and innovative ideas.
When investing, the Venture Capitalist responsibility is to the people who have invested with them, meaning, they will only invest in a business that they know will guarantee a return on their investment. These investors always expect a high return because they make big investments into the Venture Capitalist Company.
Investing in an early stage company means it will be years before there can be any return on the money invested. It takes approximately 5 to 7yrs for a company to mature from startup to exit and for anyone to get a return. Entrepreneurs should understand that the first thing Venture Capitalist are thinking about is how soon can they can exit this company, how they can make money from this idea and when they can sell it to get their money back.
While entrepreneurs think about possibility and opportunity, Venture Capitalists think about the risk and how it can be avoided, while getting to their return in the shortest possible time. It is with the same standing that Venture capitalists, unlike entrepreneurs, look at the business broadly, finding ways to make it global, whether through their international network or a well-funded campaign, all the while, increasing the chance of getting their return on investment
Venture Capitalists are usually grounded and have a broad perspective of things. It is this quality that makes them good mentors. It will help the entrepreneur to know that Venture Capitalists usually have more than one company to support and so, they remain level headed and grounded to make sure they have successful exits.
With this said, entrepreneurs looking to pitch their business ideas to Venture Capitalists must remember what that it not about impressive figures, it is however about minimizing the problems and making sure they get their return on investment. Even though they seem different, Venture Capitalists and entrepreneurs have the same goes, which is the successful growth and profitability of the company which has a positive impact on a Startups ecosystem.