What It Is: Institutional venture capital comes from professionally managed funds that have $25 million to more than $1 billion to invest in emerging growth companies. Venture capital focuses on capital investments in private, young, fast-growing companies.
Appropriate for: High-growth, high-potential companies that are capable of becoming market leaders, and being profitable in five to eight years.
Best Use: Varied. From financing product development and commercializing promising technologies to building durable well-run businesses.
Cost: Expensive. Institutional venture capitalists purchase significant equity in a business. The earlier the investment stage, the more equity is required to persuade an institutional venture capitalist to invest. The range of funds typically available is $500,000 to more than $30 million.
Ease of Acquisition: Difficult. Institutional venture capitalists are choosy. Institutional venture capital is an appropriate source of funding for only a limited number of companies.
When you are looking to raise growth funding, you'll often have to answer extremely tough questions about your business and yourself. Here's how one business owner rediscovered just how important it is to be confident.