9 Understand the VC business model—raise money faster
- Who are the key players in the VC firm and on whom should you focus?
- Do you get the financial motives that makes the VC tick?
- Do you understand the VC math that drives when and how they invest?
To succeed in the startup world, you must learn what makes Venture Capitalists (VCs) tick. Of course, the answer is money, but the way they make their money is through their business model. Understanding their business model is the key to understanding the VC specimen and what makes them tick.
The VC’s business model affects which companies they invest in, how much they invest, and who they want running these companies. It determines how they influence the strategy of their portfolio companies, so they conform to their metrics of success. It affects whether you and they are at all compatible and if you should even be talking to them.
If you lose sight of their business model, you will lose sight of how they see the world and how they make decisions. This could at best surprise you and at worst mean your startup fails because there is not a lot of room for error.