Venture Capital Financing: Conducting the Transaction

Summary

A venture capital financing is absolutely not a winner-takes-all transaction. Smart companies and venture capitalists (VCs) realize that a financing is only one of the many benefits a VC can provide to a company, and that a positive and productive working relationship with the company's venture investors is paramount to the future success of the alliance made at the time of the financing. Most deals are fairly well-balanced in terms of whose interests are represented, because of the culture of repeat entrepreneurship, the high risk/high return venture model that is largely incompatible with micromanagement of actions of the company, and the need for speed. Entrepreneurs with great management skill quickly rise to the top of the field and difficult entrepreneurs develop reputations that keep many potential investors away, no matter how fantastic the technology. Similarly, investors who are too risk-averse and controlling of good entrepreneurs will not be able to access the best (i.e., ...