Growth financing is often misunderstood. It’s not really about “finding the hottest startups.” And it’s certainly not about the next hot sector. It’s about finding companies that are growing like crazy and then owning them for a long time.
To find these companies, you have to fundamentally understand what drives success in Silicon Valley. You have to be willing to look outside your comfort zone and invest in unexpected areas. We’ll teach you how to do this with a step-by-step process that can be applied to any business in any industry.
There are many great ways to find growth investment opportunities in Silicon Valley:
- The first is to go to the top venture capital firms (Benchmark, Sequoia, Kleiner Perkins, Greylock, etc.) and speak with them.
- The second is to network with other VCs and angel investors. Many of them will share their hot deal flow with you if you’re friendly enough or if you show interest in learning about what they do.
- The third is to look at Crunchbase. It’s a public database of all companies that have done growth funding rounds, acquisitions, IPOs, etc.
- You can read reports by venture capital firms like CB Insights, research which companies are raising money and how much they’re raising.
- Moreover, you can talk to people and ask them if they are willing to help small companies by growth financing for tech.
Data and networks are the most critical assets in Silicon Valley. In their book, “The Power of Pull,” John Hagel III and John Seely Brown argue that a company’s value is directly related to its ability to collect data and analyze it.
Data has been called the ‘new oil’ in Silicon Valley because, like oil, data is irreplaceable. Oil creates fuel and electricity, which powers our vehicles, heaters, and generators. Data creates intelligence, which powers our devices, mobile apps, and computer programs.
Moreover, if you look at successful entrepreneurs, they all understand the value of their network and how to grow it. They also have access to large amounts of data, so they know exactly what their customers want.
Trust is an essential part of any relationship. A team of people you can trust is essential when growing a company. However, this is not the same as securing growth financing. When securing financing, you want to make sure that you have a team of people who can hold themselves accountable in terms of what they say and do in order to secure the investment for your company.
For example, let’s look at an entrepreneur who wants to scale his business and needs $100 million for growth financing. He would need a team that can show evidence that they know how to execute these large sums of cash and manage the expectations of investors on top of it. They would also need connections due to the nature of these investments coming from large institutions with specific requirements on how the money should be executed.
Finding the right investor for your company can be a daunting task. Most entrepreneurs do not have the appropriate relationships or industry connections to find investors and therefore rely on traditional routes such as going to banks or pitching at an event. These highly competitive and risky methods require significant time and effort. There is a better way to find investors.
The first step is to understand what an investor looks for in a potential investment to create a compelling pitch. No matter what kind of investor you are looking for, you need to be prepared to talk about your business. If you’re not prepared to promote yourself and your business, investors aren’t going to listen. The first step we recommend is setting up a meeting with potential investors.
In 2018, venture capital investment in the European tech sector reached a new high of $30bn, an increase of almost 50% from the previous year.
Moreover, companies looking for growth funding for tech to grow their businesses have a plethora of options – from private equity investors to VCs. When a company is doing well and needs to scale, it is essential to find the right investors.
Succinctly, investors look at several things when deciding whether or not to invest in a company. They want to see if there is a clear market opportunity, scalability and if there is already validation from other sources such as customers or press coverage.
Timing is an essential factor in deciding to sell your company. The decision should be made with the right timing in mind. For example, if someone wants to buy your company, they want to know that they are buying from a company that has been continuously profitable and growing for at least the past three years.
If timing is not considered when making this decision, you will not get the price you want for your business, and it may take longer to find a buyer.
Additionally, suppose someone is planning on taking on new debt or equity financing to buy out another shareholder of their company and proceeds with the sale of their business before receiving growth financing. In that case, they need to be aware of various tax implications, such as possibly having more taxable income due at the year or so.
When you are looking for companies to invest in, there are some things you can do to make sure that your investment is going to be worthwhile. For example, it’s essential to look at its financial statements and its cash flow statement. By doing so, you will have a better idea of how well the company is performing financially.