VC in DC : Finding Investment Capital or VC: The Fast Path via Matching

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Finding Investment Capital or VC: The Fast Path via Matching

If you want to find a match, it is best to understand what you're matching.

All Venture Capitalists can be differentiated on 3 axis; the stage they invest in, the geography they focus upon and their technology opportunity areas. If you're a CEO seeking money and you don't match up with these, you're really wasting your time.

At Grotech Ventures, we describe ourselves as early stage investors in high potential technology companies. Our geographic focus, which is a reflection of our personal networks over the last 25 years in the IT business, includes the Mid Atlantic, Southeast and Mountain West. So if you're outside these areas, because of stage, technology or location, we are not likely to be a good investor to approach with an your idea. Sure, there might be an exception but those exceptions are never going to be the rule.

So, the investment stage of the investor is the right starting point. Seed investors won't want to look at your Series B round, for example, and if you're pitching a Series B -- you really don't have time to waste as you're already running an operating business. As a practical matter, investors will do seed/early, Series A and B rounds, later stage (Series C+) or expansion capital so I don't want to split hairs and advise only approaching those with very specific focus. But one gets the idea, investors don't like leave their comfort zone or neighborhood.

What is the VC's neighborhood? Investment historical data is that 80% of all Venture Capital is invested within 200 miles of the VC's office. It is by and large a regional business. Yes, there are VC's that invest nationally and internationally. But, the bottom line is that VC's want to be close to their investments literally and figuratively. While I don't have data to support it, I would speculate that the earlier stage investors want to be even closer than the 200 mile average.

At Grotech, we talk about staying close to the technology areas and markets we understand and are capable of delivering the best value to our entrepreneurs. And while that varies, to some degree, by individual, we know what we don't know. If you're the latest thing in alternative energy, take it to someone who will "get" your idea and admire your insight. I wrote in an earlier blog about the best way to get a VC firm attention. The jist of which was; the current CEO's are an important conduit and filter. Those current CEO's are also a clear analog about the comfortable technology areas of the VC.

The start up CEO needs one yes answer to the funding quest. The fast way to achieve it is to narrow the search at the beginning by matching the idea, stage and geography to the right candidates.

This article has been updated from the original post with the supporting video from Fox Business Channel.