Best Companies - Venture Capital
Obviously, picking the best companies in the venture capital industry is a highly subjective task. To an entrepreneur, the best company would be the one willing to make a deal with him. Entrepreneur Magazine’s online site uses deals made to rank the 100 best.
The “best companies in venture capital list” on Entrepreneur.com which is a website associated with Entrepreneur Magazine represents an interesting way of evaluating venture capital companies. They use “deals made” as the main criteria. This makes some sense to the degree that a venture capital fund is rather useless unless the funds are “out there” financing ventures. The site also defines just what they consider as a venture capital company worthy of inclusion on the list.
To qualify for the list, a company must have a fund ranging from 25 million to 1 billion dollars available for investing. The site also lists the target companies, or deals, as being firms that can project at least 25 million in sales within five years. These qualifications show that they are dealing with the “big boys” of the industry here.
The site is also quite clear that the cost of venture capital financing is high, reminding their readers that the venture capital fund will usually expect a large share of the equity of the target company. They also report that the available is limited as the funds seek out a very select group of target companies for investment. On the favorable side, they do indicate that the sky is the limit when it comes to the type of company they are willing to back. This shows their understanding of the basic venture capital premise of willingness to be on the cutting edge and take risk, in order to realize greater profit.
They further break their list down by companies that invest in deals with early formation companies. The winner here was Maryland Technology Development Corporation of Columbia, Maryland with 22 deals. The second listing was the companies that specialize in later stage investments. The winner in this group is Tech Coast Angels of Laguna Hills, California.
Of course, the number of deals made is only one way of rating a company. For the entrepreneur with a dream, a good plan, and little conventional financing opportunity, the best company will be the one willing to give him the best deal. He would not care if he was the only deal they made that year. The total amount of the available investment fund does not give the answer either. The biggest is not always the best in the investment world.