Venture capital: yes or no? Essential steps to funding your big idea
BY JAKE POINIER
W HEN IT COMES TO WAYS of raising money for a business, perhaps nothing is more American than venture capital. After a slow 2023 in mergers and acquisitions and IPOs, it’s estimated that U.S. venture capitalists are sitting on more than $300 billion to deploy into high-potential startup firms. “There are a lot of great ideas out there and it’s hard to get money, so you want to have a system that facilitates that without the entrepreneur having to risk everything themselves,” says Ludwig Chincarini, a professor at the University of San Francisco in finance and economics. “Kleiner-Perkins pioneered the idea of venture funding in Silicon Valley with Genentech, and it’s one of the reasons America still has so many startups to this day compared to Europe, where it is less accepted.” If you hear the words “venture capital” and think Shark Tank, however, you might need to change the channel. “Shark Tank isn’t what happens in the real world,” Chincarini says. “I’ve never seen anyone ask for 50% of a company, and most companies that go
on the show wouldn’t be appealing in the venture capital world. Most companies gain exposure, some needed money, and some guidance for a relatively straightforward idea, rather than because they have a huge idea.” Two sides of the VC coin Chincarini has spent his career in the trenches in the financial industry, advising hedge funds and money manager
“It can’t be just that you need the money. The other party needs to see big upside, and both sides need to tango.” Ludwig Chincarini, Professor of Finance
and Economics, University of San Francisco
firms, and writing books such as “The Crisis of Crowding,” about the 2008 financial crisis, and “Quantitative Equity Portfolio Management,” a reference for money managers. He helped launch
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IN YOUR CORNER ISSUE 17 | 2024
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