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Why should you raise venture capital for your business?

Venture capital is sexy. It sounds cool to say “We’ve raised VC money” or “We’re venture-funded” or “We’re talking to VCs”, but these are NOT good reasons to raise venture capital. Beyond the sexiness, it’s important to understand why you as a business owner should raise venture capital since the allure of venture capital is obvious. Obtaining outside money for many businesses often means the difference between a young business’s success and failure.

Venture capital can be the fuel a young, emerging business needs to succeed.

Beyond the money, venture capitalists can also bring value in the form of experience, relationships with partners and customers and reputational benefits from your association with a venture capital firm. And of course, an investment can help a young business build their product, market, hire employees and perform other critical tasks to grow their company.

For some recipients, particularly those who hadn’t started their own businesses before, a venture capitalist’s management experience in the field that the new company is operating, for example, may be welcome and provide a foundation otherwise missing.

Ben Horowitz, co-founder of Andreessen Horowitz, a VC firm begun in 2009 along with Marc Andreessen who founded Netscape notes that the needs of startups seeking help from venture capital partners generally fall into these categories:

  • Access to large amounts of money to fund the many complex activities
  • Access to very senior executives such as an experienced head of manufacturing
  • Access to early adopter customers
  • Intense, hands-on expert help from the very beginning of the company to avoid serious mistakes