As an entrepreneur and angel investor for over 15 years who has raised both angel money and VC money, and who's sold a company to a private equity firm, I often am asked what are the best resources on the web for finding venture capital funding, whether it's from angels or VC firms.
First, my advice for early stage companies is to approach angel investors first (or Angel Investor Groups) until you have demonstrated "market validation" by first creating a sample or prototype. This sample or prototype is a representative product that contains the minimal and most vital features that show prospective customers and users what's different about your product, and better than what is currently available in the marketplace.
Gain users first, and do this before you being to contact or meet with VCs. If you contact VC firms too early, these firms frequently will not provide you with another opportunity if you approach them too soon. If you wait until you have market validation, when you do contact or meet venture capital firms, you'll be prepared and taken more seriously with angel backing and with the first users and/or paying customers lined up. In addition, your business startup will receive more favorable deal terms if and when you do decide to accept venture capital firm investment funding.
Useful angel resources in my recommendation are: PrivCo and Angel List. (PrivCo is free and includes Angel Investor groups, which are frankly preferable leads than individual angels. Angel List is primarily provides listings of individual angel investors who list themselves on the site, but Angel List then charges you as the entrepreneur to contact the listed angel investors directly). Angel Investment Group investments are often preferable than individual persons for a variety of reasons:
1. As part of an Angel Investment Group, investors pool their money together to make an investment so, say, a $500,000 investment might be made with 5 members of the angel group investment $50,000 per person. This is an easier hurdle than trying to convince one wealthy angel investor to come up with half a million dollars. Angel Investor Groups will usually hold live presentations from time to time. They will also distribute new investment business plans to their members via email monthly etc. Interested investors in the Group can then contact you directly, or they will pool their money to formally make an investment from the group's fund.
2. Angel Investment Groups far more efficient and less time-consuming than approaching one investor at a time and explaining your business pitch on angel investor at a time.
3. The validity and approval from say "Harvard Business School Club Angels" is a better endorsement for future venture capital investors than "we are backed by Sarah MacIntyre and Bill Harrison." Just do a PrivCo Private Investors Search, and select investor type "Angel Investor Groups"
For venture capital firms, the National Venture Capital Association (NVCA) has several hundreds member firms who generally represent the very largest and most active venture capital firms.. The National Venture Capital Association maintains a member database, though you must be a member to access. Venture Capital Directories like Pratt's Guide are also for sale, usually costing several hundred dollars each. But again free databases of venture capital firms can be found, as well as angel investors, startup incubators, and angel investor groups remains private company financial data platform PrivCo. As of the date of this article, PrivCo maintains a searchable database of over 6,000 venture capital firms, business incubators, angel investors, and angel investor groups / angel capital associations, using PrivCo Private Investors Search
Good luck to entrepreneurs looking to startup or expansion venture capital funding sources.
Sam Hamadeh, J.D., M.B.A. Serial Entrepreneur and Angel Investor New York, New York
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