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Venture Capital Financing Tips

Published: 5/10/2011 8:57:26 AM

Chris Dixon is a very knowledgeable entrepreneur on the subject of obtaining financing from venture capital firms. He's got a great post that lists 10 tips for new entrepreneurs on how to go about getting venture capital financing.

I particularly liked tips #7 and #9.  Tip #7 emphasizes that the earlier stage your company is the more you should focus on the quality of investors rather than the valuation. Too often entrepreneurs get hung up on trying to squeeze out a higher valuation, while their deal becomes stale or they create negative impressions with investors. This tactic is a classic example of "penny wise pound foolish" thinking. You should be more focused on getting the best people to help you build your company rather than valuation at the earliest stage.

Tip #9 recommends that you get to know prospective VCs by talking to entrepreneurs that they've already funded, checking out their success rate in general doing significant due diligence on them, just as they are doing on you. You'll be far happier knowing exactly with whom you are getting into a long-term business relationship.

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Don Jones
CEO, VentureDeal

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