Entrepreneurs develop products and ideas that entail significant capital during the initial stages of their startups’ life cycles. Many of them do not have adequate funds to support projects themselves, and hence they seek outside funding.
This is where venture capital comes into play, which can be described as a form of private equity financing that is provided by venture capital firms to early-stage and emerging startups that are expected to have high growth potential or have either shown high growth, whether in terms of a number of employees, annual proceeds or scale of operations, to name a few.
Venture capital firms invest in these startups in exchange for equity, or an ownership stake. These firms are run by venture capitalists, who are often deemed to bring decision-making and technical know-how, and most importantly capital, to their investments.
Let’s have a look at some of the important characteristics that make the anatomy of a good venture capitalist:
Intellect:
A good venture capitalist possesses the intellect to identify innovative or disruptive ideas that have the potential to generate high commercial revenues at an early stage.
Curiosity:
A curious VC is someone who is constantly on the lookout for new startups, evolving technologies, or product innovations in the market. And along with curiosity comes learning. A VC should always be open to learning about new ideas from the founders of a startup. Being curious and open-minded will only broaden and enhance their knowledge pool.
Expertise:
Having profound expertise in any or all of the aspects surrounding venture capital is considered to be good for a VC. This helps them create good strategies for the development of the startups they invest in and guide the founders meticulously.
Passion:
This is one of the most inherent qualities a person needs, not only to thrive in the field of venture capital but also anywhere else in life.
Any venture undertaken with passion will yield the greatest results. The passion of working alongside the founders in developing their startup is very necessary for any VC. This will further encourage the founders and other team members of the startup to give their best.
Good networking skills:
Having a good network across the startup ecosystem is a must for any VC. Maintaining good contact with relevant people will help the VC in both acquiring appropriate startup deals and helping out their portfolio startups. Another important point to note here is that quality always wins over quantity and when it comes to networking, it’s important to maintain contacts, but with the right people who can help you out in your future endeavors rather than mislead you.
Risk-taking capabilities:
The world of startups is a challenging one and a VC should always be ready to take intelligent risks, while also being prepared for the outcome, whether positive or negative. To become an efficient risk-taker, he/she must develop experience and certain qualities in order to identify potential players in the startup field.
Conviction:
A VC must always have the conviction to follow what he/she feels, provided it is fully thought-out, data-focused and driven by their gut feeling. Folks might try to warn you regarding a certain move or decision you are about to take, but what makes a great VC is his ability to reject those terms and follow his/her heart.
Emotional Intelligence:
This attribute plays an essential role in forming good relationships with your peers and people working under your guidance. How much ever strong a bond is formed with the founders of a VC’s portfolio startup, they should be non-emotional in dealing with them and strike a good bond with the ones that are actually performing the best. Be empathetic to the needs of the founders and create an environment where they are allowed to share their opinions and also willing to take constructive criticism effectively.
The above-given characteristics are not the only ones and there is a never-ending list of what can make a venture capitalist a good one. But these do form the fundamentals required to create a delightful startup ecosystem by investing in good and innovative startups.
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