No Sunshine for Venture Capital Deal Sourcing
Venture capitalists have a very demanding job. They are responsible for researching and investing in startups, managing their investments, and helping their portfolio companies succeed. They must also be well-connected and have a deep understanding of the market and industry trends. All of this requires a great deal of dedication, hard work, and networking. Welcome to the world of the Deal Sourcer.
So, let’s get into the skin of the regular Venture Capital Deal Sourcer. Where are their pains? How could they overcome them? Surely there are many, but in this blog, we focus on 5 pain levels.
1. Limited access to deal flow
Many venture capital firms lack access to a broad range of deal flow and investors. Venture capitalists have limited access to deal flow due to the fact that there are only a limited number of Startups actually on their radar. They also are limited by their own defined mandate and must therefore focus on specific sectors and have specific criteria for the investments they make. This means that in many cases, the deals presented to venture capital firms may not meet the criteria of the firm. Sadly, very often venture capital firms may have limited resources, meaning they may not have the bandwidth to review all of the potential deals presented to them. Ultimately, this results in limited access to deal flow for venture capitalists. This basically means they miss out on great opportunities, every day.
2. Difficult to assess quality of deal
It can be quite difficult to assess the quality of a deal, and determine which investments are likely to yield the highest returns. Rodller handles a part of this process when we typically assess the quality of a deal based on a variety of factors. These include the strength of the team behind the business, the market opportunity for the product or service, the technology involved, the competition, and market timing. Obviously, we put a lot of weight in the track record of the founders, the potential for scalability, and the risks associated with the venture. Rodller does not do a profound due diligence but venture capitalists will typically conduct ‘heavy’ due diligence on the company, such as examining its financials, customer feedback, and plenty other data points. Rodller will decide whether or not to list a Startup in our Deal Sourcing Portal based on our evaluation of the quality of the deal. The VC will follow with its own Due Diligence if it gets short listed for a term sheet.
3. Time consuming due diligence
Due diligence can be a lengthy process, which can be difficult to manage in an efficient manner. Venture Capitalists require companies to provide extensive information and data about their operations, financials, team, and market opportunity before making an investment. This can be a time-consuming process, as the VCs need to ensure that the company is well-positioned for success and has a sound strategy for growth. VCs may also request additional information if they have any questions or concerns about the company. Rodller can help in this process by providing a nifty Data Room in the Rodller Capital Portal.
4. Regulatory and legal issues
Regulatory and legal issues can be a major barrier to investment, and can take time to navigate. Venture capitalists manage regulatory and legal issues by staying abreast of changes in the law, working with experienced legal counsel and consultants, and ensuring that their investments are in compliance with applicable laws and regulations. Additionally, venture capitalists may research the legal and regulatory climate of potential investments, participate in industry groups, and work with the government to ensure a favourable outcome. Rodller does not participate in any Legal processes, this is fully owned by Founder and Investor.
5. Unclear exit strategies
Exit strategies can be unclear, and can be difficult to plan for in advance. Venture capitalists often rely on a variety of strategies to deal with an unclear exit strategy. Here as well, it is up to the VC to assess the likeliness of a good exit. The Rodller Growth Marketing Services can help to boost the Startup, but a refined exit is a different problem statement then the actual growth strategy.
Conclusion
With some humour, we can state that Venture Capital Deal Sources live in perpetual agony. Lucky for them, there is Rodller to resolve a wide set of challenges, speed up processes and increase the capability to deploy Capital effectively.
About Rodller
Rodller (www.rodller.com) provides Digital Marketing, Fundraising, and Application Development Services. With offices in Singapore and France, we serve both Startups and Fortune 2000 firms. We use a next-generation Portal to combine the use cases of Digital Marketing, Fundraising, and Application Development in tangible processes.
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