Five Qualities Venture Capital Firms Look For in Startups

Venture Capital is a term oft-bandied about, but sometimes it's a mysterious process. Speaking at Stanford University, Beth Seidenberg of VC firm Kleiner Perkins Caufield and Byers tried to clear up a aspect: Whether a startup is worthy.

Check out the extract from her lecture--it's extremely easy to digest:

Seidenberg narrows the hunt down to five key criteria that need to be met before KPCB will consider funding a startup:

  • A-plus Leadership
  • Large, Fast-growing, Under-served Market
  • Reasonable Financings
  • Sense of Urgency
  • Missionaries not Mercenaries

The key feature is strong leadership--it's absolutely vital as far as KPCB is concerned and this makes good sense: Start-ups are often relatively small enterprises, with short management chains and they'll face significant challenges on a day-to-day basis. Good leadership is key to surviving these.

The remaining criteria also make pretty good sense, which is satisfying: Entrepreneurs have to be sensible about the value of their operation, keen to drive the team to success on a short scale, and more concerned with achieving a successful business than driving for high profits. The particulars of the KPCB criteria probably aren't a good match for other VC firms--for example their interest in high tech-risk companies, versus low tech-risk companies that try to achieve large markets--but the overall common sense in here is hard to argue with. That's probably unsurprising since KPCB has Colin Powel, Al Gore and Sun Microsystems' John Gage as partners.

It's good food for thought, especially if your nascent company is about to chase some of that VC money presumed to have recently dried up. It may just be flowing again.

[via VentureBeat]

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