How Venture Capital Works
by Bob Zider
Our Price: $6.50
Availability: Available for download now
Category: Book
See more book details and other editions
Book Summary Information
Author: Bob ZiderEdition: Digital
Format: Download: PDF
Published: 1998-11-01
ISBN: N/A
Number of pages: 12
Publisher: Harvard Business Review
Book Reviews of How Venture Capital Works
Book Review: Great Insight to Venture Capital
Summary: 5 Stars
I am a small business owner looking at growing my own business and have thought about using Venture Capital (VC) as an option. I really did not want to read an entire book on VC fundamentals and this article was definitely the ticket. I was able to learn what types of returns, companies and industries are typically sought by VC firms. I was also able to get some insight on downside risk and management concerns that are posed by VC investments.
I have been fortunate enough to run a profitable business for 10-years without the need for capital and have very little experience in capital investment. This artical is packed with very useful information on anyone considering using a VC firm to fund their company.
This book was written during the Internet Boom in the late 1990's, but the author has some amazing insight to what would happen with the VC investments in inflated internet companies that went public. I am writing this review in July of 2006. This is a timeless article that will apply to any company who is considering working with VC in the current business era.
Summary of How Venture Capital Works
In this article, Bob Zider, president of the Beta Group, a California-based firm that invests in commercializing new technologies, presents an analysis of present-day venture capitalists and shows why its practitioners have a lot more in common with investment bankers than you might think. The popular mythology surrounding the U.S. venture-capital industry derives from a previous era. Venture capitalists who nurtured the computer industry in its infancy were legendary both for their risk taking and for their hands-on operating experience. But today things are different, and separating the myths from the realities is crucial to understanding this important piece of the U.S. economy. Today's venture capitalists are more like conservative bankers than the risk takers of days past. They have carved out a specialized niche in the capital markets, filling a void that other institutions cannot serve. They are the linchpins in an efficient system for meeting the needs of institutional investors looking for high returns, of entrepreneurs seeking funding, and of investment bankers looking for companies to sell. Venture capitalists must earn a consistently superior return on investments in inherently risky businesses. The myth is that they do so by investing in good ideas and good plans. In reality, they invest in good industries--that is, industries that are more competitively forgiving than the market as a whole. And they structure their deals in a way that minimizes their risk and maximizes their returns. Although many entrepreneurs expect venture capitalists to provide them with sage guidance as well as capital, that expectation is unrealistic. Given a typical portfolio of 10 companies and a 2,000-hour work year, a venture capital partner spends on average less than 2 hours per week on any given company. In addition to analyzing the current venture-capital system, the author offers practical advice to entrepreneurs thinking about venture funding.In this article, Bob Zider, president of the Beta Group, a California-based firm that invests in commercializing new technologies, presents an analysis of present-day venture capitalists and shows why its practitioners have a lot more in common with investment bankers than you might think. The popular mythology surrounding the U.S. venture-capital industry derives from a previous era. Venture capitalists who nurtured the computer industry in its infancy were legendary both for their risk taking and for their hands-on operating experience. But today things are different, and separating the myths from the realities is crucial to understanding this important piece of the U.S. economy. Today's venture capitalists are more like conservative bankers than the risk takers of days past. They have carved out a specialized niche in the capital markets, filling a void that other institutions cannot serve. They are the linchpins in an efficient system for meeting the needs of institutional investors looking for high returns, of entrepreneurs seeking funding, and of investment bankers looking for companies to sell. Venture capitalists must earn a consistently superior return on investments in inherently risky businesses. The myth is that they do so by investing in good ideas and good plans. In reality, they invest in good industries--that is, industries that are more competitively forgiving than the market as a whole. And they structure their deals in a way that minimizes their risk and maximizes their returns. Although many entrepreneurs expect venture capitalists to provide them with sage guidance as well as capital, that expectation is unrealistic. Given a typical portfolio of 10 companies and a 2,000-hour work year, a venture capital partner spends on average less than 2 hours per week on any given company. In addition to analyzing the current venture-capital system, the author offers practical advice to entrepreneurs thinking about venture funding.
Business & Investing Books
Book Subjects
- Arts & Photography
- Audiobooks on Cassette
- Audiobooks on CD
- Biographies & Memoirs
- Business & Investing
- Children's Books
- Comics & Graphic Novels
- Computers & Internet
- Cooking, Food & Wine
- e-Books
- Engineering
- Entertainment
- Gay & Lesbian
- Health, Mind & Body
- History
- Home & Garden
- Horror
- Law
- Literature & Fiction
- Medicine
- Mystery & Thrillers
- Nonfiction
- Outdoors & Nature
- Parenting & Families
- Professional & Technical
- Reference
- Religion & Spirituality
- Romance
- Science
- Science Fiction & Fantasy
- Sports
- Teens
- Travel
Most talked about in Venture Capital - Recommendations by Kip Piper
The Directory Of Venture Capital & Private Equity Firms 2005: Domestic & International (Directory of Venture Capital and Private Equity Firms)Grey House Publishing; Published: 2005-02-28; Paperback; Book
Best price: $450.00
Inside the Minds : Venture Capitalists - Inside the High Stakes and Fast Moving World of Venture Capital (Inside the Minds)Ebrandedbooks.com; Published: 2000-08; Paperback; Book
Best price: $39.99
Fundamentals of Venture Capitalby Joseph W. Bartlett
Madison Books; Published: 1999-08-25; Hardcover; Book
Best price: $13.48
Price in other shops:
The Venture Capital Cycle, 2nd Editionby Paul Gompers, Josh Lerner
The MIT Press; Published: 2004-12-01; Hardcover; Book
Best price: $44.00
Price in other shops:
Beyond the J Curve: Managing a Portfolio of Venture Capital and Private Equity Funds (The Wiley Finance Series)by Thomas Meyer, Pierre-Yves Mathonet
Wiley; Published: 2005-09-02; Hardcover; Book
Best price: $59.78
Price in other shops:
Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations (Bigwig Briefs)by Alex Wilmerding
Aspatore Books; Published: 2006-01-01; Paperback; Book
Best price: $9.46
Price in other shops:
Venture Capital Due Diligence: A Guide to Making Smart Investment Choices and Increasing Your Portfolio Returnsby Justin J. Camp
Wiley; Published: 2002-01-18; Hardcover; Book
Best price: $35.27
Price in other shops:
Venture Capital Handbook: New and Revisedby David Gladstone
Financial Times Prentice Hall; Published: 1987-10-01; Paperback; Book
Best price: $6.70
Price in other shops:
Venture Capital Investing: The Complete Handbook for Investing in Private Businesses for Outstanding Profits (Financial Times Prentice Hall Books)by David Gladstone, Laura Gladstone
FT Press; Published: 2003-08-23; Paperback; Book
Best price: $26.00
Price in other shops:
Careers in Venture Capital, 2005 Edition: WetFeet Insider Guideby WetFeet
WetFeet, Inc.; Published: 2004-01-15; Paperback; Book
Best price: $26.30
Similar Books and other products
The Venture Capital Cycle, 2nd Editionby Paul Gompers, Josh Lerner
The MIT Press; Published: 2006-09-01; Paperback; Book
Best price: $23.00
Price in other shops:
Angel Investing: Matching Startup Funds with Startup Companies -- A Guide for Entrepreneurs, Individual Investors, and Venture Capitalistsby Mark Van Osnabrugge, Robert J. Robinson
Jossey-Bass; Published: 2000-05; Paperback; Book
Best price: $6.97
Price in other shops:
Venture Capital Investing: The Complete Handbook for Investing in Private Businesses for Outstanding Profits (Financial Times Prentice Hall Books)by David Gladstone, Laura Gladstone
FT Press; Published: 2003-08-23; Paperback; Book
Best price: $26.00
Price in other shops:
Venture Capital and Private Equity: A Casebookby Josh Lerner, Felda Hardymon, Ann Leamon
Wiley; Published: 2004-10-15; Hardcover; Book
Best price: $72.42
Price in other shops:
Venture Capital: The Definitive Guide for Entrepreneurs, Investors, and Practitionersby Joel Cardis, Sam Kirschner, Stan Richelson, Jason Kirschner, Hildy Richelson
Wiley; Published: 2001-09-14; Hardcover; Book
Best price: $20.00
Price in other shops:
Venture Capital and the Finance of Innovationby Andrew Metrick
Wiley; Published: 2006-09-22; Hardcover; Book
Best price: $76.48
Price in other shops:
Fundamentals of Venture Capitalby Joseph W. Bartlett
Madison Books; Published: 1999-08-25; Hardcover; Book
Best price: $13.85
Price in other shops:
Venture Capital Due Diligence: A Guide to Making Smart Investment Choices and Increasing Your Portfolio Returnsby Justin J. Camp
Wiley; Published: 2002-01-18; Hardcover; Book
Best price: $35.27
Price in other shops:
Deal Terms - The Finer Points of Venture Capital Deal Structures, Valuations, Term Sheets, Stock Options and Getting VC Deals Done (Inside the Minds)by Alex Wilmerding
Aspatore Books; Published: 2006-01-01; Paperback; Book
Best price: $49.95
Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations (Bigwig Briefs)by Alex Wilmerding
Aspatore Books; Published: 2006-01-01; Paperback; Book
Best price: $12.44
Price in other shops: