Monday, September 15, 2008

What VCs Look For

I was just reading an article in the Pennsylvania Gazette (the alumni magazine of the University of Pennsylvania) about funding IT grad's entrepreneurial ventures. A couple of Wharton grads decided to start a venture fund focusing on entrepreneurs with Penn connections. They've funded everything from Diapers.com to First Flavor.

The one statement that stood out to me most was this:

“When I’m looking at the financial projections for a company, the one thing I know for certain is that they’re wrong,” says Topche. “Maybe the market changes; maybe a new competitor will appear; maybe there will be a regulatory change. The ability of the management team to adapt to that change in their environment by adjusting their product or doing something different strategically is almost always the determining factor in the success of that company. These are things that you have to get comfortable with before you write a check.”

That's why Venture Capitalists like investing in smart management. While you can write a great plan and have detailed financial projections, you have to be flexible and able to adjust your plan as the market changes or opportunities present themselves.

To read more, visit this link: http://www.upenn.edu/gazette/0908/pro04.html
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