Venture Capital For Dummies
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Venture capital is great for companies that match the profile, but if your company doesn’t match, don’t worry. Lots of other opportunities are out there:

  • Specialized types of VC funds: Venture capital funds are allowed to make their own rules about who they fund and who they don’t fund. They also can make rules about how much they will put in each company. Industry-restricted funds often follow the industry expertise of the general partner.

    However, funds can be specialized around a certain mission or geographic region. If you look hard enough, you may be able to find a fund dedicated to support any given type of company. Here are some common specialized fund types:

    • Geography focused: Invest in companies that are located in a specific city or region

    • Impact focused: Invest in for-profit companies that help the world by furthering a social or ecological cause

    • University focused: Invest in companies that are coming out of a specific university or that are started by alumni

    • Industry focused: Invest in healthcare IT, clean tech, social media, life sciences, or energy, for example

  • Seed funds: These are venture capital firms that invest small amounts in very early-stage companies. One might put $25,000 in each of five to ten companies per year. Note: Sometimes this term is used for a fund that gifts grants instead of making investments for an exchange of equity. Be careful and know which kind of fund you are talking about to avoid any surprises.

  • Evergreen and rolling funds: These funds operate differently than the typical model. The evergreen fund is often found in cause-based investments, and every time the fund has an exit, it then rolls that money back into new investments.

    In rolling funds, the fund manager is constantly seeking investors for the fund. These can be complicated to manage because of the difficulty of setting the value of a fund share at any one point of time when the fund is comprised of illiquid investments with highly indeterminate value.

About This Article

This article is from the book:

About the book authors:

Nicole Gravagna, PhD, Director of Operations, and Peter K. Adams, MBA, Executive Director for the Rockies Venture Club, connect entrepreneurs with angel investors, venture capitalists, service professionals, and other business and funding resources.

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