The majority of that capital went to follow-on funding for projects originally developed through the far greater expenditures of governments ( $63 billion) and corporations ( $133 billion). Moreover, we estimate that less than $1 billion of the total venture-capital pool went to R&D. Venture capitalists invested more than $10 billion in 1997, but only 6 %, or $600 million, went to startups. has realistic expectations about process and outcome.Ĭontrary to popular perception, venture capital plays only a minor role in funding basic innovation.understands the cost of capital and typical deal structures and is not offended by them,.

works diligently toward a goal but maintains flexibility,.understands the need for a team with a variety of skills and therefore sees why equity has to be allocated to other people,.has a good reputation and can provide references that show competence and skill,.recognizes the need for speed to an IPO for liquidity,.tells a compelling story and is presentable to outside investors,.delivers sales or technical advances such as FDA approval with reasonable probability,.is qualified in a “hot” area of interest,.Profile of the Ideal Entrepreneurįrom a venture capitalist’s perspective, the ideal entrepreneur: For entrepreneurs (and would-be entrepreneurs), such an analysis may prove especially beneficial. Although the collective imagination romanticizes the industry, separating the popular myths from the current realities is crucial to understanding how this important piece of the U.S. venture-capital industry is envied throughout the world as an engine of economic growth. Today’s venture capitalists look more like bankers, and the entrepreneurs they fund look more like M.B.A.’s. But as the venture capital business has evolved over the past 30 years, the image of a cowboy with his sidekick has become increasingly outdated. Their investing knowledge and operating experience were as valuable as their capital. Arthur Rock, Tommy Davis, Tom Perkins, Eugene Kleiner, and other early venture capitalists are legendary for the parts they played in creating the modern computer industry. At his side stands the venture capitalist, a trail-wise sidekick ready to help the hero through all the tight spots-in exchange, of course, for a piece of the action.Īs with most myths, there’s some truth to this story. In these sagas, the entrepreneur is the modern-day cowboy, roaming new industrial frontiers much the same way that earlier Americans explored the West. The popular press is filled with against-all-odds success stories of Silicon Valley entrepreneurs. What’s more, they have a powerful grip on the nation’s collective imagination.

Venture capital firms