Venture capital (VC) funding is appropriate for early-stage companies with high growth potential. This type of funding typically comes after seed funding provided by angels. VCs are VERY selective when investing in companies. They look for companies in areas where they have expertise and can add value. They also look for:
- A solid value proposition, where there is a need that the company is solving better than anyone else
- Technology innovation that provides a competitive advantage for the company
- Large market potential ($100 million +)
- High growth markets
- A strong management team
Because VCs invest large amounts in risky start-ups, they normally get very involved in your company and spend a lot of time determining compatibility with you and your team. Involved VCs can increase the probability of a successful exit (either through helping the company get acquired or preparing the company for an initial public offering), which allows them to receive return on their investment.
Our venture capital community is active and growing. Here are some of the funds investing in start-ups:
- TNInvestco (a group of funds for companies in the state of Tennessee)
- Meritus Ventures (central and southern Appalachia rural areas)
- Southern Appalachian Fund (small businesses in TN, KY, and Appalachian counties in GA, AL, and MI)
- Solidus Company (health care services, information technology, media)
- MB Ventures (biotechnology and medical devices)
- Innova (biosciences, technology, ag-bio)
- Salix Ventures (health care services and information technology)
The National Venture Capital Association has good information for learning about the venture capital industry.