Most specialize in one or a few closely related industries. The high tech industry of California's Silicon Valley offers many shining examples of capitalist investing. Venture capitalists may scrutinize thousands of potential investments annually, while investing ultimately in only a handful. The possibility of a public stock offering is critical to venture capitalists. Quality management, a competitive or innovative advantage, and growth of the industry are also major concerns.
Venture capitalists differ in their approach to management of the business in which they invest.
They generally prefer to passively influence a business, but will react when a business does not perform as expected and may insist on changes in management or strategies. Relinquishing some of the decision making and some of the potential for profits comprise the major downside to equity financing. If venture capital financing still seems like the ideal source of funding for your business, you may contact these investors directly, although they are known to make most of their investments through referrals. Apple Computer, Federal Express and Nike Shoes received financing from SBICs at critical stages of their growth.