Specialty Funds . . .

are venture capital firms that invest their money only in companies or products that fall within an identified industry or field of endeavor. For example, a specialty fund might invest only in ventures which offer a product or service directly, but not necessarily exclusively, related to the needs of the electric and gas utility industry. Another fund might focus exclusively on ecommerce or medical technologies.

Specialty funds use their industry focus to help attract investors and give them an edge in identifying promising companies in their chosen industries. By specializing, they are able to develop industry-specific expertise that cannot only help them understand and identify the potential of a new company in the industry, but that can also help them assist that company after they have made their investment.

Spending time to identify specialty funds in his company’s industry can help an entrepreneur raise capital. Even funds that are not specialty funds tend to specialize in industries or stages of financings. Identifying the tendencies of investors can help a company focus its fund-raising activities and increase its changes for success. See: Venture Capitalists for some sources containing listings of investors. See also: Corporate Venture Capital, Shopping, Value Added.