several successful exchange- traded funds and helped build a brokerage firm. And as an active member of an angel group who has also made pitches to venture capitalists, he understands the investment dynamic far beyond academic theory. “Many businesses need a substantial amount of capital to get started, and it’s usually the ones that have big, innovative ideas rather than existing frameworks,” Chincarini says. “For example, a restaurant is a fairly straightforward business that wouldn’t ask for venture capital.” Would-be seekers of venture capital need to understand the first side of the coin is the amount of money needed to succeed—
pitch to,” he says. “It’s about getting in the door, as well as getting the money. For example, when I was raising money a few years ago, a lot of doors opened, not necessarily because I knew a lot of people, but because my background
“Many businesses need a substantial
amount of capital to get started, and it’s usually the ones that have big, innovative ideas rather than existing frameworks.” Ludwig Chincarini, Professor of Finance and Economics, University of San Francisco
looked good—and even then I had to be relentless, calling, emailing, and so on.”
A venture capital firm will assess the founders, the potential of the
industry or market, and the opportunity for an idea to make money—but it’s far from an exact science. “Sometimes it’s hard to recognize what is worthy of an investment,” Chincarini notes. “For example, Tom Perkins, who was the godfather of venture capital in Silicon Valley, sometimes missed them, as well. When Steve Jobs and Steve Wozniak first went to Tom, before they started Apple, he refused to fund them. Part of the reason was their appearance [he thought they were dressed like homeless people]. They eventually got money, but it’s a good example of how there are a lot of little things in play.” Stage presence Between the different stages of venture capital— seed stage, early stage and late stage—Chincarini has observed a trend towards later-stage firms, because the minimum investment can be larger, and the proof of concept is there. “At the seed stage, the amount of money being asked for is smaller, but it’s riskier,” he says. Novices in the VC arena may be concerned about losing control over their company, but Chincarini describes that as a relative non-issue compared to finding a firm that is willing to invest in your dream. “There’s a lot of variance, and many investors have a laissez faire attitude,” he continues. “Even if they get 10% equity in your company, they usually don’t have enough voting power to do anything.” In other words, you are likely to enjoy the benefits of their investment without having to manage unwanted input.
but the other is what is going to attract a potential investor. “It can’t be just that you need the money,” he continues. “The other party needs to see big upside, and both sides need to tango.” Winding up for the pitch As a first step, Chincarini recommends researching all the major firms on CrunchBase and through Google searches, and as approaching as many as you can—because even the VC firms themselves sometimes don’t know what they’re looking for. But beyond that shotgun approach, look towards your own connections. “If you have a connection to someone who’s worth a billion dollars, that’s the first person you’re going to
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