Venture capital (also known as VC or Venture) is a type of private equity capital typically provided for early-stage, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company. Venture capital investments are generally made as cash in exchange for shares in the invested company. [wikipedia]
I’ll be the first one to admit that I don’t know all that much about VC or the process of acquiring it, so I figured that I might as well share a little about my experience as I learn how to navigate through this community. Even though the chances of women CEOs getting VC are increasingly slim, I like beating the odds, so hopefully this series doesn’t end with, “Giving up on Venture Capital Quest: Part 27.”
To date, my experiences with VC have primarily been through various clients. Typically clients come to us with an idea for a unique social network, and some who treat the project as a serious investment often supplement their own monies with third-party funding in the form of venture capital. This funding might be secured at the onset of the project, partially through the development, or after the site has launched and proven itself to its community and potential investors. We rarely if ever connect directly with clients’ investors, but indirectly, we contribute to the process of securing funding pretty significantly, if that is in the form of a prototype or demo, a fully functioning network, or very early on through a detailed design and development plan that goes into the clients’ business plan.
We do this legwork to help our clients secure funding, some of which (hopefully) funnels our way for the creation of the site. At some point we realized that this is also an avenue that our company could explore. We have all the necessary ingredients that VCs apparently look for: an established management team, a prototype (social network software), and several solid concepts to pursue. On top of this we have the design talent, the technical know-how and the business sense to successfully create and grow a website business.
Because we are building social networks for our clients daily and we are tuned into the fast-changing trends of working with social media, we have an especially acute perspective of this high-growth industry. Prospective clients come to us daily with good ideas and bad ideas, and at this stage, we have a honed sense of what makes a strong concept worth developing. Unfortunately we lack the time and resources to grow each of these independent concepts and projects to their fullest potential, many of which we feel hold significant long-term promise.
We are not looking for investors for Pearse Street, which sustains itself well at this point, but for new projects that are conceptualized and in some cases already designed and developed by our team internally. Every year we allocate a certain amount of funds to building out these “internal projects” that could ultimately spin off into their own businesses, but have limited time and funds to properly grow them to their fullest potential.
So! The model that we’re looking for is a little unorthodox to start with, which is one of the first challenges. I am attempting to circumvent the usual process of randomly submitted a single business plan to one of hundreds of VC websites. I’ve only reached out via email to about 20 firms, primarily in the New England area. I have a feeling with the economic crunch, this method probably isn’t going to yield many results, but I have more up my sleeve. Next step: networking!
