There’s a lot of money in Silicon Valley. But what exactly are venture capital investors looking for? In Secrets of Sand Hill Road, Scott Kupor—managing partner of Andreessen Horowitz, one of the most successful VC firms in the world—explains how to make investors choose you.
Kupor has overseen growth at AH to more than $7 billion in assets. Let’s see what he has to say.
Think It Through
Some of the most successful startups in history were funded by venture capital, including Facebook, Apple, Amazon, Google, Netflix, and Twitter. Some successful non-technology businesses like Home Depot, Starbucks, and Blue Bottle Coffee were also funded by VCs. These brands became what they are due to innovation, yes. But also due to investors.
So where should you start? Before taking the first step, there’s a lot to consider. Venture capital is a form of equity financing for companies that are not suitable candidates to get traditional funding from banks. Small-business loans are not always the best form of financing because they are temporary and have to be paid back. This makes loans best suited for businesses that are likely going to generate near-term positive cash flow sufficient to pay both the loan and interest.