Building Wealth through Venture Capital

CHAPTER 4How to Find the Right Venture Capital Firm

You've decided you want to invest in venture capital as one component of your overall asset allocation strategy. Now, how do you find which firm to invest with?

Surveying the Landscape of Venture Capital Firms

On the surface, there appear to be lots of options. According to FindTheCompany.com, there are around 1,200 venture capital firms to choose from. That includes some overseas firms as well as many that might be better characterized as angel groups.

While the line between venture capital firms and angel groups isn't always clear, other sources that use a tighter definition of venture capital firms estimate the number of U.S.‐based venture capital firms in the 500–600 range. This excludes angel groups and individual angels, who generally invest even earlier in the evolution of a venture.

Unless you already know a lot about venture capital and also have a lot of time on your hands, we'd suggest you focus on venture capital firms and exclude angel groups from your consideration set. Angel groups generally require considerable time from their members, who typically handle the venture screening, due diligence, and investment administration tasks that are handled for you by professionals at more traditional venture capital firms.

Since this book attracted your attention, we're guessing you do not have extensive venture capital investment experience. If that's right, we'd strongly urge that you look for a firm with solid ...