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.
Do you really want to blog about entrepreneurship and venture capital? Sure.
My colleague Dan and I were asked by Ellen Yu and the Verizon Small Business team to share our thoughts and information about start- ups, entrepreneurship, from our perspective at Verizon's corporate venture investing program (http://verizon.com/ventures).
There is already a lot of very good information published or available online about these topics, and more is generated every day. There are some great commentators and very experienced investors who freely share their experiences. Many of our posts will highlight what we consider to be very good articles, books, blogs, podcasts, and other resources on particular topics of interest.
My top online recommendation is one of my favorite financial VC bloggers, Mark Suster from GRP Partners. First of all, his writing is excellent. His blog, Both Sides of the Table, is a great educational tool for anyone running a start-up or considering the VC funding route to fuel their company. He also has does a weekly podcast at ThisWeekIn called "This Week in Venture Capital". His interviews are informative and entertaining. I don't know where he gets the energy (or time) to do all this publishing and recording, but it is a great service to innovators and investors.
While you are checking out ThisWeekIn, you should also look for Jason Calacanis' podcast, ThisWeekInStartups. Jason gets an amazing line up of entrepreneurs to explain the traps and tricks they have learned following their passion.
In future posts we will provide additional recommendations about where we go to learn more every day about these topics. Of course, we’ll also share our personal insights with you too as we have vetted many business proposals from entrepreneurs seeking funding.
Here’s my first tip: Anyone can ask for funding, but a company that can recruit a strong team and deliver a great productdeserves to be funded and has the best chance to succeed. Continuously seek direct and critical input from advisors, customers, and vendors to objectively evaluate your team or product. Don’t be afraid of hearing negative feedback. Just the opposite. Thank the messenger and do whatever you can to address real or perceived shortcomings. Former New York City mayor Ed Koch was famous for his line, “How am I doing?” Make sure you know how others would answer the question about your company.
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Hello readers! Please meet Mark Smith (left) and Dan Keoppel (right), the team that runs Verizon Ventures, a specialized group that seeks out and invests in promising entrepreneurial companies to drive innovation in Verizon.
Verizon is constantly looking for new innovative products and services to bring to our customers. While we have engineers designing and developing new technology; the Verizon Ventures team also seeks out companies that complement Verizon networks, service platforms and distribution channels.
Now, before all of you send your business plans to Dan and Mark to ask for funding – do note that they and their team are looking for that one company that is developing the very next cutting edge technology. They are very selective in the company to invest in and once selected the funding from Verizon could range from seed money to $5 million depending on the needs and opportunities.
I asked both Mark and Dan to join as bloggers to provide their insights as both have reviewed many business plans and have heard many proposals from small- and medium-sized companies. I think you’ll find their insights invaluable… whether they share what entrepreneurs have done to impress them, tips to hone in your presentation skills or even the venture capital blogs they read and the stories they are following.
Of course, feel free to ask Mark and/or Dan your question(s); just post it in the comments section at the bottom of this blog post or their post.
You’ll read Mark’s first blog post tomorrow.