20 Ways To Land VC Funding

Many entrepreneurs dream of attracting millions of dollars in venture capital (VC) funding to bring their innovative business concept to the world.

It's not until they've gone through the meat-grinder process of pitching VCs, negotiating with VCs, working with VCs, giving up huge chunks of equity to VCs and taking orders from VCs that they realize that their dream was at least one part nightmare.

Venture Capitalists are not interested in seeing you fulfill your dreams. They're interested in making money. If you're able to fulfill your dreams and make some money for yourself along the way, all the better. But those two criteria are not necessary for them to judge one of their investments to have been a success.

This short rant is my way of saying Be Careful What You Wish For when it comes to landing VC funding.

With that off my chest, pray allow me to relate an intersting article I came across on the Money magazine web site. Reporters from Money asked a group of successful venture capitalists to share their ideas on what types of companies they would fund if they could just find the right people and business plans. The result of the survey was a list of 20 concepts which can be reviewed by clicking on the headline of this posting.

Two things I found particularly interesting:

1) Most of the numbers and timelines (as in how much money they would invest over what period of time) the VCs cited were unrealistic. For example: $5 million to fund a 20-person team over the course of 3 years to develop a heads-up display to retrofit on automobiles. Payroll and overhead for a 20-person team in any high-cost metropolitan area is going to bust that budget long before we even talk about doing any research and development.

2) The idea of VCs pitching their own ideas and recruiting entrepreneurs to come in and make them happen turns the usual approach on its head. Entrepreneurs are generally willing to put up with all the hell and dilution of ownership that accompanies VC participation in order to make their own dreams or business ideas manifest - not those of someone else. Now, if an entrepreneur sees an item on this list that is in direct alignment with what he is currently working on - great! Otherwise, I just don't get it.

You see, more likely than not, after spending 3 years and $5 million, that heads-up display venture will be no more. Without a dream providing at least the mirage of light at the end of the tunnel, the people on the team are going to have a hard time coming into work every day.