The Politics of Silicon ValleyBy Larry Scheinfeld

For the past two decades, startups

have been a major driving force of

innovation.

Companies such as AirBnB, Seamless,

and Uber have dramatically reshaped our economy as they

made life unprecedentedly more convenient.

Unfortunately, innovation often

comes with a hefty price tag, which is

why many of today’s most exciting startups have turned to venture

capital to fund their businesses. Image source: www.thedailybeast.com

But where large sums of money are involved, politics inevitably follow.

Here is a quick guide to what you need to know to push past them and seal the

deal: Image source: www.cbinsights.com

It’s all about numbers.Less than one out of every 10 startups is able to receive venture capital.

This is because venture capitalists are not about small

loans.

They seek to invest multi-millions of dollars in exchange for returns

that are even bigger.

The markets they invest in also have to be quite big and

display huge potential.

Therefore, companies seeking

somewhere between $10,000 and $100,000

should look for angel investors, who

like to contribute smaller sums. Image source: money.cnn.com

Companies that need more than $100,000 but

less than $1 million should consider

attracting micro-VCs, investment funds of

between $10 million and $50 million who are more likely to make

smaller contributions.

Get the right advice and assemble the best team.

The best politicians are surrounded by dozens of advisors who refine everything from the

clothes they wear to the words they say.

The same is true of companies.

Prior to reaching out for venture funding, attend a conference in which you can pitch your ideas to a panel that will critique them to give you valuable

feedback about the things you’re doing well and the things you should improve

to make your organization more attractive for venture funders.

Build your company with a trusted team.

Seasoned leaders will help venture capitalists feel confident in the ability and stability of your

company.

Venture capitalists also look for leaders who display tenacity, drive, flexibility, and

knowledge.

You need the right setup.

Politics is a lot like dating.

For example, the qualities of being polite, presenting a compelling persona, and just generally putting the

best foot forward may help you secure a second-look (or second date) from a

major venture capital fund.

However, getting the first date—the

venture capital firm’s first look at your company—

often takes the right setup or

recommendation.

Also, remember that venture capitalists take a

lot of time to consider their investments even after a

successful introduction, so be prepared to “wine and

dine” as necessary by providing required

information and finding the best way to sell your

vision.

Remember that dating is meant to be fun!

A lot of companies make the mistake of

presenting their organizations as too

serious.

Of course, professionalism and a solid business plan are important to securing a

venture capital investment, but venture capitalists also want to work with companies that run on passion.

You are not just asking for money to grow a business, but for an investment in your

vision for the future.

If you liked this piece, visit: LarryScheinfeld.net

Larry Scheinfeld is a co-founder and partner of Zelkova Ventures. Before working at Zelkova, Larry was employed at Quellos Group as a principal and financial advisor, specializing in private equity, hedge and real asset funds, as well ashybrid offerings. Follow Larry on Twitter, Facebook & LinkedIn to learn more!