Definition Or Explanation: Institutional venture capital
comes from professionally managed funds that have $25 million to $1
billion to invest in emerging growth companies.
Appropriate For: High-growth companies that are capable
of reaching at least $25 million in sales in five years.
Supply: Limited. According to recent surveys from the
National Venture Capital Association, U.S. venture capital firms
annually invest between $5 billion and $7 billion. Many of these
investment dollars go to companies already in the institutional
venture capitalist's portfolio.
Content Continues Below
Best Use: Varied. From financing product development to
expansion of a proven and profitable product or service.
Cost: Expensive. Institutional venture capitalists demand
significant equity in a business. The earlier the investment stage,
the more equity is required to convince an institutional venture
capitalist to invest.
Ease Of Acquisition: Difficult. Institutional venture
capitalists are choosy. Compounding the degree of difficulty is the
fact that institutional venture capital is an appropriate source of
funding for a limited number of companies.
Range Of Funds Typically Available: $500,000 to $10
million.
From Where's the Money? Sure-Fire Financing Solutions for
Your Small Business, by Art Beroff and Dwayne Moyers. (c)
Entrepreneur Press, 1999.