Venture Capitalist Australia

Venture capitalists risk their money and that of their investors that have supported their fund. They typically invest in 30 companies within 3 to 4 years of starting their fund and then spend the next 6 years supporting their portfolio of companies to help them become as successful as possible.

Venture Capitalists in Australia expect the majority of their portfolio companies to either not survive or have modest returns. In order to payback the full value of the fund to their investors and generate superior returns, they need to swing for the fences and take risk with their capital. They need to support extraordinary entrepreneurs and ideas that, at the time, may seem crazy.

Consider companies such as Facebook and Twitter. When these companies first asked for funding, their ideas were very basic, they had no revenue models and they didn’t even know whether their businesses would work. The venture capitalists that invested and backed these companies made a fortune because they placed a lot of faith in the founders.

This is an interesting point for all business owners that are looking to raise capital. Venture capitalists place a huge emphasis on the founding team and the earlier the business’ stage, the greater the focus on the founders.

This is one of the reasons venture capitalists Australia make it difficult for startups to reach out to them, and why they prefer to receive warm referrals from trusted contacts and colleagues.

Think about it this way, if you were recruiting a new employee and a trusted contact of yours referred a candidate to you, wouldn’t you be more willing to interview this candidate over the hundreds of others who simply emailed their resumes? What if your trusted contact personally called you and told you about a candidate and also shared their resume with you and insisted that you meet the candidate before they accept a job elsewhere?

It is very convincing, right? Well in the venture capital world, it is no different. Here, at Shape Capital, we only refer a business to a venture capital firm that we have already vetted after reviewing that company’s pitch deck, conducting background checks on the industry and market opportunity and looking at other similar companies that have raised capital.

Also we would have already spoken with the founders and decided to invest our own funds in the business. So, when we send a referral to a venture capitalist there is an expectation that we would have done our home work and are committed to back the business with our own funds.

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Venture Capitalist Australia
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