Thursday, December 22, 2011

Your Portfolio Investment

Analogy to Venture Capital Investing

  • Searching by leadership status: In the world of venture capital investing there are leaders and there are followers. The leaders, also known as "lead" firms, are those that have recognized expertise and who conduct extensive due diligence on their prospective portfolio companies. The followers, known as "follow-on" investors, are more passive. They simply invest alongside the lead firms. Lead firms can be helpful when you are trying to raise your second, third or fourth round of venture capital because their presence alone can attract other investors for these later rounds. They are no help when you are trying to raise your first round of venture capital, however. Review your source material and weed out the firms that do not act as the lead investors in deals.


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