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Myths and facts about venture capitalists.

Asia Africa Intelligence Wire

| July 24, 2001 | COPYRIGHT 2001 Financial Times Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

(From Israel Business Arena)

Byline: Michael Neuvirth

To many startups, a venture capitalists is a legend. He/She can be your company's savior - providing lots of money and lots and lots of value added. In fact, in many cases, the success of your company may be directly proportional to the level of the venture fund that invests in it. The better the fund - the better the chances are that you will succeed.

In spite of this crucial fact, most startups really do not know all that much about the venture firms they approach. They check their web sites and maybe a little bit more. There are a lot of misconceptions - or as a friend of mine says - urban legends about venture capitalists.

Today's Enable will try to demystify the venture capitalist by providing you with 5 myths about venture capitalists. Following that, we provide a few links dealing with the best and the worst venture capitalists around. The results of the worst will really surprise you.

Myths About Venture Capitalists

Myth Number 1 - A Venture Capitalist (VC) is Vulture Capitalist: This is really untrue. A really good VC (the one you want) understands the valuation game and will not try to take more of your company then makes sense in the long run. True VCs know that founders must remain motivated and will try to value the company based on this and other factors. The amateur VC will try to squeeze as much as he/she can out of your valuation-wise, without thinking long term. These are the ones to stay away from. In fact, a warning light should go off if one of the first things asked by the VC is the valuation.

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