Fundraising

The truth behind venture capital fundraising from a top tier venture capitalist

Venture capital fundraising has an incredibly low success rate and there are many other kinds of capital available for growing businesses. But if venture is the right path for your business, pay attention to the process and numbers

CEOs and business owners thinking about venture capitalism to get money for their company need to be aware of the whole process – and the unique terminology involved – before making the decision to raise. If you opt for the fundraising route, ignore the glamour of media headlines talking about a company raising millions; behind that headline is a lot of strife.

Speaking on a panel at #movethedial’s International Women’s Day event, venture capitalist Janet Bannister spoke frankly about the real numbers behind venture capital fundraising and offered her tips on critical benchmarks to pay attention to.

Venture capital is helpful, but not in every instance

Originally starting her career at Procter & Gamble, Bannister went on to global consulting firm McKinsey before joining eBay in 2000. She’s been in tech ever since. She learned about fundraising and scaling multiple tech companies firsthand before becoming a venture capitalist, joining Real Ventures in 2014 as a General Partner.

The process of venture capitalism

When it comes to venture capital and other fundraising processes in business, there are distinct steps, followed in order, each with their own names and definitions.

“Pre-seed rounds are typically led by angel investors, friends and family,” Bannister said. Sometimes there will be incubators and accelerators companies will go through for money and to open doors to angels.”

For many in the audience who hadn’t fundraised before, some of the terms Bannister used – like “angel” or “incubator and accelerator” – sounded confusing (Scroll down for a plain-English explanation of the terms Bannister used!).

“Then there’s the Seed round,” Bannister continued. “Seed-stage investors are typically looking at two things: What’s the vision and looking at the team. Then you have Series A and beyond (B, C, D, etc.).”

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