Question

In addition to equity financing, venture capitalists provide "value added" services to their portfolio companies. Name at least three significant value added services that may be provided by venture capitalists.

Answer 1

Alongside the financial backup which is oft considered the singular function of a venture capitalist they serve a broader role in the formation of early players and the in-betweeners.We can enlist the following three in a broader spectrum

1) Due Dilligence and Compliance: One of the biggest value addition when a startup comes into early stage financing is that they get the requisite regulatory approvals in tandem with local authorities as they are stricter entry barriers for various VC's to enter in their framework

2) Risk Return Analysis : The pitch which startup companies make is a projected figure on their demand supply gap and the market they capture.Through the Venture Capitalists intervention the risk return analysis comes to the fore with their market value as per the percentage allotted .

3) Branding: What is oft seen by the team in sales is the branding and the steady flow of customers which the VC's bring with them. Branding through the early stage media and digital logs brings the sales funnel for a smoother flow.