Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources

Acquiring venture capital can be a huge boost for a fledgling business or one ready to move on to the next level. Venture capital is notoriously difficult to obtain however and entrepreneurs are always eager for tips on wooing VCs. A recent study headed by Stanford finance professor Ilya A. Strebulaev got to the bottom of what matters most to venture capitalists when it comes to investing in a new company.

The study call “How Do Venture Capitalists Make Decisions?” surveyed 885 venture capital investors at 681 different companies. These VCs were asked what was the most important factor in selecting investment projects. They gave an overwhelming response: the strength of the management team. Of all those surveyed, 95 percent claimed the team was an important factor with 47 percent listing it as the most important aspect. When asked what factors made the biggest impact on both successful and failed investments, venture capital professionals (92 percent) again replied that the team leading the business was the most important factor. Business model and product issues were much less relevant, they said.

For entrepreneurs this means they can’t fake it. They need to demonstrate immediately a strong passion for their work, a depth of experience in their particular field and their personal capabilities to lead the company to success.

Passion, specifically, is essential to VCs deciding to invest. Strebulaev said, “If you meet with an investor and have a great idea, but you’re pursuing it in your free time, that suggests there’s no passion involved. And if the entrepreneur is bootstrapping their idea, putting their own money into it, VCs really like that. It’s a huge signal about seriousness.”

The study found that venture capitalists typically investigate about 80 business opportunities each year but only investing in four. For business owners looking for one of those four spots, demonstrating that they are committed and knowledgeable and ready to take on the world will give them the edge they seek.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources