What do you know about venture capitalists?

in #finance6 years ago

Hey there, it's a cool evening over here in Benin city, been raining all day.

I've been in contact with some venture capitalists lately trying to understand how they make investment decisions. Amongst all I came in contact, I was especially humbled with the works of Naval Ravikant. He recently started his own VC http://spearhead.co, after a long time investing in Y-Combinator's projects. Ravikant is an angel investor with investments in Twitter, Uber, Yammer,‍‍‍ and over 100 other startups. His twitter is usually filled with wisdom, you can check him out - username is @naval.


Image Credits: GREEN PRO Synergy

In Ravikant's own words,

VCs and universities are both in the business of hunting black swans. They filter the applicant funnel, brand selected candidates, and harvest the winners rep to further enlarge the funnel.

The first thing you should know is that venture capitalism involves high risk. It definitely is not a place for the fainthearted. Risk capital is the amount of money that is invested in a corporate venture. So what a venture capitalist does is to provide this risk capital for a startup. This aids the startup in expansion.

A venture capitalist is usually a company, while an individual is called an angel investor.


Infographics by e27

If these startups become successful companies, the venture capitalists then earns unimaginable interests on the early investments. When it's the other way around, if the startup fails, it's a loss for the venture capitalist. A venture capitalist is usually rich in order to take such risks. A venture capitalists seeks for startups where they can get easily get good interests, at times over 100%. It may take years to get this, but the patience is usually worth the wait.


Illustration by Delaware Inc

Venture capitalists do not only provide funds for the startups, they also provide financial literacy, proficiency and experience in handling businesses for the startups. All these are done in order to help the businesses progress faster, because it's easier for startups to fail than to succeed.


Illustration by Banking Tech

Due to the risk involved, venture capitalists look out for some things before investing. They do not engage in blind investments. The idea and the team behind the idea are two core areas they look at. The market is also important - they usually invest in the FinTech industry.

They are so many venture capitalists out there, if you have a great idea to pitch, prepare to see them. Success in your endeavours.

What else do you know about venture capitalists?

Image credits were clearly stated when necessary.



Thanks for coming around :)


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Thanks for this man!

But most of the time, especially in our society, if a person does not have a previous relationship with the VC, it is difficult to get them to invest in your business even though the idea might seem feasible.

Nah, I quite disagree to an extent. Although it's important the VC know the team, they might not have done any business previously together. VCs are actually increasing in Nigeria. I know a handful of VCs in Lagos and Abuja.

Rocket Internet has invested in Jumia, Easy Taxi, Kaymu and Jovago.

Ventures Platform a VC in Abuja invested in ThriveAgric and some other startups.

The growth of FinTech in Nigeria is dependent on VCs.

Okay.
That's good to know.

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