Once the new firm has established itself and has a working organizational structure, a viable business plan, and start-up arrangements are set, a venture capital firm may be interested. However, some venture firms prefer a still later stage, perhaps where the new company is in a second or third round growth stage, and needs more capital either to carry out expansion plans, or to tide it over until a merger or public offering carries it to the next stage of corporate growth. A company's business plan serves as the primary analytic tool for the venture capitalist. In analyzing that plan, a venture capitalist would most likely focus on three features. The product or service.
Investors seek product or service innovations that give the company a strong competitive advantage.
No matter how good the product and experience of the management is a key factor in the success of the business. The astute investor is well aware of this and looks for solid evidence of such ability. The industry's growth. Investors also want to be sure the product or service is in a growth field. A product improvement, by itself, is unlikely to bring back a dying product category.