At Verizon Ventures, my colleague and I are exposed to literally 100s of businesses a year. The question we are most often asked - what sort of companies does Verizon invest in? The short answer: we look for companies that can lead to a compelling commercial relationship between the startup and a Verizon business unit. Now compelling is a suitably vague answer that means it should be important to both companies; we’re not looking for a specific measurable threshold, nor are we interested in one-sided transactions. If it’s important to both companies, it will cause both to commit to making the relationship work.
We typically invest between $1-5 million in an opportunity, so we’ll need to know how much money the opportunity needs. A good business plan is the starting point that will at least ball park the capital requirements. Each opportunity must provide us with a detailed business plan. Now we don’t necessarily track progress against that plan, but it helps us understand how much cash is needed in the short term and gives us some view on where the business might grow.
Unsolicited proposals usually go nowhere. At Verizon we route them to the appropriate experts for a quick analysis and then typically decline them because these proposals don’t fit our business needs. If you can’t spend the time to figure out the appropriate contact within an organization, then that’s usually a sign you don’t understand how to sell to the industry. And if you don’t know how to sell to the industry, then you probably don’t have a sophisticated enough understanding of how the solution will fit and who other competitors might be. A credible introduction to us or for that matter, to any potential investor is a must.
The last question is whether you want to go with a strategic investor, a traditional VC or an angel investor. This requires both a little bit of research by the entrepreneur and some introspection. An entrepreneur needs to understand what he wants for the company and the sort of partner he wants as investor. Every class of investor will bring something a little different to the table besides money. The value add that Verizon Ventures brings is help navigate the Verizon organization in support of the business development goals of the company. That means the companies we invest in are fairly well baked. If you have just a business plan or a patent or even less, then you’re better off turning elsewhere. If you still think your business will be the right fit for us, go to our website and submit your proposal – good luck to you!
To evaluate alternative investors, start close to home, nearly all VCs and angels prefer to invest in nearby companies that they can meet with regularly. Find out what sort of companies the investor typically looks for. While there are pay-for databases to research ventures and investors, there are a number of websites for evaluating Venture investors for free or for a nominal fee. CrunchBase (http://www.crunchbase.com/) and DealPedia (http://www.dealipedia.com/) are both good resources for deal activity. TheFunded (http://www.thefunded.com/funds/discuss) is excellent on review venture investors. I’m sure a search can turn up other resources on how to get funding for your business.
Feel free to post any questions for me below or share how you’ve found funding for your business.