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.

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I happen to think there’s about a million good reasons to start a social network, but that naturally is because I live and breathe this industry, and I have an amazing team at my fingertips who happen to be skilled in all levels of social network geekery. Outside of my mania however, there are numerous sound and legitimate reasons to start your own online community. Below I have highlighted a few, and I hope to build onto this list in the future…

Fill an Untapped Niche in the Social Networking World. If you’re anything like me, you have periodic revelations about something that you’re certain hasn’t been done yet. And if you are me, you immediately think about how you can fill the void through a social network of some sort. Like Twitter but only for sports fans! A community for Twilight-obsessed moms! A network to connect tattoo enthusiasts with tattoo artists! While social networks have really become commonplace in our lives the past few years, there is still plenty of opportunity to fill a void. I will say that the chances are low that any run-of-the-mill idea can compete with social networks giants like Facebook, Twitter or LinkedIn. These networks target a very general and broad audience. Websites that target specific niche communities, serving the needs of that particular group, I feel have a fighting chance of gaining momentum. If successful, they could have a chance of achieving more broad appeal. Facebook, for example, was originally built for college and university students. MySpace was primarily for musicians. Both evolved from serving a specific niche community to serving literally millions of users from all over the globe, including numerous corporate giants who now use these networks as must-have microsites for their brands.

My advice? Take your idea, identify potential target audiences as specifically as you can, research competing sites and find out how you can best serve that group with the most useful tools. What if there are other tattoo networks, for example? Don’t be discouraged. If there are others competing in this market, it’s typically a good sign. It means that there actually is a market. You just need to find out how to make your concept better: more unique, more useful, more visually-appealing and valuable enough to attract the lion’s share of the market. (more…)