Determining Whether Your Company Is a Venture Company

By Nicole Gravagna, Peter K. Adams

Part of Venture Capital For Dummies Cheat Sheet

It’s very important to figure out the type of company you’re building — a venture company or a lifestyle business — so that you can decide whether you should consider venture capital in your business growth strategies. Sometimes, determining which category you fall into is hard. Even though lifestyle businesses can make annual revenues into the millions, other things, like the type of business and/or the rate of growth, make them unsuitable for venture capital investment. The rate of growth and the ultimate size of the company are good indicators that can help you decide.

Characteristics of Venture Companies Characteristics of Lifestyle Businesses
Area in which you do business National or global Local or regional
Growth rate Very fast (you plan to grow from a brand new company into a
nationwide corporation in only a few years)
Slow (you plan to open only one new location of your business
each year, for example)
Nature of business Generally game changing businesses based on new
technologies
Businesses that sell or deliver traditional or conventional
products or services
Makes money for Investors, founders, and owners Founders and owners
Future plans To be sold to another company or to go public, with founders
leaving the business or assuming different roles, based on need and
qualifications
To be kept in the family for generations or to be sold when the
founder/owner retires