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refers to a simple fact: Companies that are conveniently located to their market and to an investor’s headquarters are more likely to get funded than those that are not. Venture capital funds invest more than money in companies. They invest time and expertise as well. An investor’s experience and business contacts can be valuable to a company. As a consequence, venture firms operate most efficiently when the companies they invest in are located relatively close to their headquarters. The next best case for a venture investor is to have his investments located in clusters that allow him to monitor several investments on one trip. (One venture capital investor we know of invested only in cities from which a round trip could be completed in one day.) When selecting venture capital firms to approach, geography suggests that a company should stay as close to home as possible. When approaching a fund located a long distance away, management should be sensitive to the fact that the venture investor may want to make a joint investment with a local fund or one that has a portfolio of investments near the company’s headquarters. Companies located away from suppliers and customers should be careful to describe to investors how they plan to overcome the inconveniences this causes. The business plan is the best way to address these problems and their solutions. See: Networking, Syndications, Value Added. See also: Shopping, Specialty Funds. |
