Getting into a deal with a venture capital firm is the integral part of fund raising for most entrepreneurial firms. Many companies and entrepreneurs each day contact the venture capitalists in order to get a financial support for their firm’s growth. As a result, dozens of inquiries are heading to VC firms, from which some should be precisely handpicked.
When it comes to entrepreneurial activities and venture capital investments, higher degree of contingencies is involved. Venture capital firms tend to take more risks than other financial institutions by taking shares in the entrepreneurial firms. Entrepreneurs are also known to be risk takers. The due diligence process of VC firms requires a systematic process, in which every aspect of the prospect business is scrutinized. The process involves steps such as market study, industry analysis, technology analysis, legal issues, entrepreneur’s pitch, etc. On the decision making model of venture capitalists several models and theories have been proposed by scholars, however, a VC investor’s intuition still weighs more. The Role of the Golden Eagle Entrepreneurs I have been involved in the VC business from Europe to Middle East for years, and among all VC investors I found one major consensus that outweighs the other criteria: “the golden eagle entrepreneur”.
The venture capitalists now understand that the role of the entrepreneur is the most important factor in decision-making. VC firms hardly invest during seed stage; instead, they enter in the early growth or success growth stages. The reason is that they are looking for entrepreneurs rather than business ideas and innovations. They know that a real entrepreneur makes the initially poor idea innovative and strong in future. Almost all VC firms agree upon validating the entrepreneur’s character before digging into any other aspects of the business. They mostly look for entrepreneurs who explore and exploit business opportunities. This is one of the main reasons that the venture capital firms do not enter in the seed stage, and instead they look for some people who already proved themselves as risk takers.
Recently the pitch has become more valuable than business plan. When an entrepreneur meets the venture capitalist, the first impression speaks louder than the written documents and figures and numbers.
Last year I have been involved as a member of a jury in the entrepreneurship festival and recommended to change the second phase judgments, including a 15-minutes pitch. The result of adding the pitch to the valuation process was remarkable. Previously, the jury only assessed the ideas based on the business plans, however, when the entrepreneurs presented their business ideas, there was a big change in the results. Some of the ideas that previously got better points entered the next stage. The reason behind this change was nothing more than the entrepreneur’s character. Once the venture capitalist makes sure that a golden eagle entrepreneur secures the business idea, they tend more in that investment. There are some mistakes that the juvenile golden eagle makes and venture capitalists can help them in the management and lead the business to success.