VC Fund Types, Players, Structure
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Dr. Brent Lundell, PhD, MBA
Mar 23, 2013, 1:20:02 PM3/23/13
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Please consider this free-reprint article written by:
Dr. Brent Lundell, PhD, MBA
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Article Title: VC Fund Types, Players, Structure
Author: Dr. Brent Lundell, PhD, MBA
Word Count: 749
Article URL: http://www.isnare.com/?aid=1826896&ca=Finances
Format: 64cpl
Contact The Author: http://www.isnare.com/eta.php?aid=1826896
Easy Publish Tool: http://www.isnare.com/html.php?aid=1826896
*********************** ARTICLE START ***********************
Types of Venture Capital Funds
Let�s do a quick review of the types of venture capital funds. VC firms differ in their investment approaches. Some companies
� Invest for a quick turnaround, by going public�selling within the public equities markets
� Invest for the long-term, planning for slower growth, but strong tax benefits
� Invest in new ideas
� Invest only in their areas of expertise
� Invest anywhere in the world, as long as potential profits are strong
� Invest in fledgling and start-up companies
� Invest in established and profitable companies that need expansion assistance
� Invest only in certain, defined industries
� Invest only locally or regionally
� Invest only nationally
� Invest only internationally
Venture Capital Firm Players
Venture capitalists (VCs) usually come from a finance or an operational experience background. It is, in fact, surprising how many VC firms have at least one Harvard MBA with investment banking or corporate finance experience working at them. They almost all have consultants or partners with heavy experience in the fields in which the company invests.
Although the titles are not entirely uniform from firm to firm, other positions also exist at
VC firms.
Typical positions and background information for fast track VC personnel:
1. Partners
a. This is the top-level position within the firm.
b. Partners almost always own part of the company and may, in fact, be a founder.
2. Principals
a. This is generally a mid-level position.
b. The incumbent is normally being considered for partner.
c. Most principals will be promoted from within, after extensive experience.
d. May have investment banking or related-category management consulting experience.
3. Senior Associate
a. Incumbents can hold Low to Mid-Level Positions.
b. Anticipate being considered for Principal.
c. Hired from within or outside the firm, based on category or financial background.
d. Expected to have 5 plus years� category management consulting experience or investment banking experience.
e. They are generally involved in and mentored in investment decisions in an attempt to �bring person along.�
4. Associate
a. Lower-level position.
b. With seasoning and professional maturity, may move into Senior Associate position.
c. Hired from within or outside, based on category or financial background.
d. Usually possesses 1-2 years related category management consulting experience or investment banking experience.
5. Entrepreneur-in-Residence (EIR)
a. Almost always specific category experts.
b. Perform critical due diligence for firms in that category.
c. Usually time-limited employed (less than 2 years) by VC firm.
d. Locate and present start-up ideas to VC firm.
e. Eventually could be hired by the VC firm as a Senior Associate or higher.
Why Venture Capitalists? (Again�)
Many people come up with brilliant ideas but lack the capital to put them into practice.
Writers maintain that even an average person can come up with an idea so outstanding that if the person followed up and made it work, they would become wealthy. Because of their expertise in a related field, VC firms help the idea person start their business, and through mentoring and financial assistance, bring that idea to fruition.
This mentoring is crucial because VC firms may have enormous experience in a dozen businesses similar to the one the �idea person� has developed, and know what will and will not work.
Of course the firm is handsomely rewarded for those inputs.
Key Points of How Funds Are Structured
� Most VC funds are designed to last between 8-12 years (with 10 years being the norm) depending on how quickly the fund can be liquidated after maturation and the need for the investment in the company�s liquidity.
� The investment cycle usually lasts at minimum three years and usually extends to seven years or longer if the company has �gone public.�
� It can take a few days up to several years to raise sufficient money from limited partners to provide enough money for their fund.
� A fund is considered �closed� after the target amount of money has been raised, and the life of the fund then begins with a predetermined end date.
� A firm may have a partial close when part of the money has been raised.
About The Author: Dr. Brent Lundell owns http://www.GainStreamGroup.com, a venture capital sourcing and consulting company, and is a partner in The Guinn Consultancy Group, Inc. The Guinn Consultancy Group provides a wide array of business services, including seminars, webinars, and venture capital sourcing services.
Please use the HTML version of this article at:
http://www.isnare.com/html.php?aid=1826896
*********************** ARTICLE END ***********************
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Message delivered directly to members of the group:
publish-the...@googlegroups.com
*****************************************************************
Please consider this free-reprint article written by:
Dr. Brent Lundell, PhD, MBA
*****************************
IMPORTANT - Publication/Reprint Terms
- You have permission to publish this article electronically in free-only publications such as a website or an ezine as long as the bylines are included.
- You are not allowed to use this article for commercial purposes. The article should only be reprinted in a publicly accessible website and not in a members-only commercial site.
- You are not allowed to post/reprint this article in any sites/publications that contains or supports hate, violence, porn and warez or any indecent and illegal sites/publications.
- You are not allowed to use this article in UCE (Unsolicited Commercial Email) or SPAM. This article MUST be distributed in an opt-in email list only.
- If you distribute this article in an ezine or newsletter, we ask that you send a copy of the newsletter or ezine that contains the article to http://www.isnare.com/eta.php?aid=1826896
- If you post this article in a website/forum/blog, ALL links MUST be set to hyperlinks and we ask that you send a copy of the URL where the article is posted to http://www.isnare.com/eta.php?aid=1826896
- We request that you ask permission from the author if you want to publish this article in print.
The role of iSnare.com is only to distribute this article as part of its Article Distribution feature ( http://www.isnare.com/distribution.php ). iSnare.com does NOT own this article, please respect the author's copyright and this publication/reprint terms. If you do not agree to any of these terms, please do not reprint or publish this article.
*****************************
Article Title: VC Fund Types, Players, Structure
Author: Dr. Brent Lundell, PhD, MBA
Word Count: 749
Article URL: http://www.isnare.com/?aid=1826896&ca=Finances
Format: 64cpl
Contact The Author: http://www.isnare.com/eta.php?aid=1826896
Easy Publish Tool: http://www.isnare.com/html.php?aid=1826896
*********************** ARTICLE START ***********************
Types of Venture Capital Funds
Let�s do a quick review of the types of venture capital funds. VC firms differ in their investment approaches. Some companies
� Invest for a quick turnaround, by going public�selling within the public equities markets
� Invest for the long-term, planning for slower growth, but strong tax benefits
� Invest in new ideas
� Invest only in their areas of expertise
� Invest anywhere in the world, as long as potential profits are strong
� Invest in fledgling and start-up companies
� Invest in established and profitable companies that need expansion assistance
� Invest only in certain, defined industries
� Invest only locally or regionally
� Invest only nationally
� Invest only internationally
Venture Capital Firm Players
Venture capitalists (VCs) usually come from a finance or an operational experience background. It is, in fact, surprising how many VC firms have at least one Harvard MBA with investment banking or corporate finance experience working at them. They almost all have consultants or partners with heavy experience in the fields in which the company invests.
Although the titles are not entirely uniform from firm to firm, other positions also exist at
VC firms.
Typical positions and background information for fast track VC personnel:
1. Partners
a. This is the top-level position within the firm.
b. Partners almost always own part of the company and may, in fact, be a founder.
2. Principals
a. This is generally a mid-level position.
b. The incumbent is normally being considered for partner.
c. Most principals will be promoted from within, after extensive experience.
d. May have investment banking or related-category management consulting experience.
3. Senior Associate
a. Incumbents can hold Low to Mid-Level Positions.
b. Anticipate being considered for Principal.
c. Hired from within or outside the firm, based on category or financial background.
d. Expected to have 5 plus years� category management consulting experience or investment banking experience.
e. They are generally involved in and mentored in investment decisions in an attempt to �bring person along.�
4. Associate
a. Lower-level position.
b. With seasoning and professional maturity, may move into Senior Associate position.
c. Hired from within or outside, based on category or financial background.
d. Usually possesses 1-2 years related category management consulting experience or investment banking experience.
5. Entrepreneur-in-Residence (EIR)
a. Almost always specific category experts.
b. Perform critical due diligence for firms in that category.
c. Usually time-limited employed (less than 2 years) by VC firm.
d. Locate and present start-up ideas to VC firm.
e. Eventually could be hired by the VC firm as a Senior Associate or higher.
Why Venture Capitalists? (Again�)
Many people come up with brilliant ideas but lack the capital to put them into practice.
Writers maintain that even an average person can come up with an idea so outstanding that if the person followed up and made it work, they would become wealthy. Because of their expertise in a related field, VC firms help the idea person start their business, and through mentoring and financial assistance, bring that idea to fruition.
This mentoring is crucial because VC firms may have enormous experience in a dozen businesses similar to the one the �idea person� has developed, and know what will and will not work.
Of course the firm is handsomely rewarded for those inputs.
Key Points of How Funds Are Structured
� Most VC funds are designed to last between 8-12 years (with 10 years being the norm) depending on how quickly the fund can be liquidated after maturation and the need for the investment in the company�s liquidity.
� The investment cycle usually lasts at minimum three years and usually extends to seven years or longer if the company has �gone public.�
� It can take a few days up to several years to raise sufficient money from limited partners to provide enough money for their fund.
� A fund is considered �closed� after the target amount of money has been raised, and the life of the fund then begins with a predetermined end date.
� A firm may have a partial close when part of the money has been raised.
About The Author: Dr. Brent Lundell owns http://www.GainStreamGroup.com, a venture capital sourcing and consulting company, and is a partner in The Guinn Consultancy Group, Inc. The Guinn Consultancy Group provides a wide array of business services, including seminars, webinars, and venture capital sourcing services.
Please use the HTML version of this article at:
http://www.isnare.com/html.php?aid=1826896
*********************** ARTICLE END ***********************
- To distribute your articles go to http://www.isnare.com/distribution.php
- For more free-reprint articles go to http://www.isnare.com
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