In my last post, I discussed the essence of an entrepreneur according to Jeffrey Bussgang in his book “Mastering the VC Game.” However, understanding an entrepreneur is only part of the puzzle; realizing what makes a venture capitalist tick can piece the puzzle together.
We often work with entrepreneurs and start-ups that are seeking funding, so learning about the venture capital club can be immensely helpful. Bussgang reveals some interesting characteristics of venture capitalists, including:
- Venture capitalists are intelligent, competitive, curious and driven to succeed. At first glance, this list of characteristics might seem similar to that of entrepreneurs, but the difference lies in their emotional attachments and goals. An entrepreneur uses his intelligence, competiveness and curiosity to create and lead his company, while a venture capitalist uses similar characteristics to be an enabler or facilitator.
- A venture capitalist's mind is going in many different directions – so much so that a venture capitalist will often get bored working on one company at a time. That is why he is not as emotionally invested in the company as the entrepreneur. Bussgang explains that a venture capitalist is the backer of a movie in which he never stars, and he likes it that way.
- The venture capital club is an exclusive bunch; it consists of fewer than 6,000 members in less than 1,000 firms. According to the National Venture Capital Associations, there were 790 firms as of 2010.
The next question is how does a startup company get noticed by a VC? Typically, the startup should have a revolutionary idea that can change the industry. The entrepreneur should also want the expertise and participation of the venture capitalist. Equipped with this venture capitalism knowledge, PR pros can peek inside the venture capital club and better position their companies to grab the attention of venture capitalists.
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