Out of the thousands of business plans that are presented this year to the Blue Chip, River Cities and Walnut venture funds, less than 50 were funded. The reason is truly human bandwidth. When a venture firm invests in a new enterprise, it is rarely a passive investment. VC's tend to become very involved with their new partners in a variety of ways participating on the board, providing networking to potential customers, partners, suppliers and other sources of capital, and becoming part of their strategic management team. On average, a professional at a venture firm can manage 8-12 companies as an investment at any given time.
Some companies require more attention than others and at different stages of development.
If the chemistry between the venture firm and the new company is right, there can be great synergies that make things happen. Venture firms can provide instant experience having helped many companies through similar situations. Venture firms can make introductions with a quick that many companies would never ever be able to accomplish. This really requires a different type of fund a seed fund that makes smaller investments and provides more coaching than the typical venture fund can provide. Seed investors find it difficult to analyze opportunities, because they are not doing it full time like venture firms, and sometimes they provide excellent coaching but are limited in the amount of time they can spend.