Successful founding and financing of nanotechnology companies

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5) How do I identify the right venture capital investor for me?

Roughly speaking, there are three basic ways for start-ups or early-phase companies (nanotechnology-based or otherwise) to obtain capital. These are:
  • Government funding
  • Bank loans
  • Equity capital
  • In your search for the "right" venture capital company or fund, you should first look through all the information sources you can find to answer a few basic questions:
  • Does the venture capital investor have meaningful experience in my industry?
  • Does it have a proven track record of success?
  • What companies does it have in its portfolio? Where are these in terms of commercialization and profitability?
  • In what stages of company growth does it usually invest, and what is the preferred investment size?
  • Is it open to early-stage investments, or will it only invest at a later stage when there are some potential customers who have tested the product or process and expressed strong interest? Are there any potential competitors in its investment portfolio?
  • You should think through all of these points. Much of this information can be readily found on the internet, particularly from the venture capital investors' own websites. By comparing these points against your own profile, you should be able to narrow down the list of possible investors to a small number of promising candidates.
    Practical tip: To dig a bit deeper, you may want to try contacting some of the portfolio companies which are owned by the venture capital investor. You can usually find a list of portfolio companies held on the investor's website. By talking to the companies, you may be able to find out more about their actual experience with a particular venture capital company.