Venture capital is big business for both investors and startups. In fact, according to the MoneyTree Report by the National Venture Capital Association and PricewaterhouseCoopers, venture capitalists invested approximately $21.2 billion in deals in the United States for the third quarter of 2011.
Not every startup is ideal for a venture capitalist deal, but this type of private equity funding is especially popular among tech companies. In fact, many of the most successful online companies have been successful at getting off the ground with the help of venture capital.
Companies that Have “Made It” with Venture Capital
Technology companies that have proven themselves with a solid business plan, sound financial management, and an innovative idea are attractive investment opportunities for venture capitalist firms. Many of the biggest online companies today were once funded with the help of deep-pocketed venture capitalists who thought that their companies were a good investment.
As an example, Google is one of the most valuable brands on the market today, but 10 years ago it was a brand new company seeking money to take its ambitious web project to the next level. It was successful in receiving this venture capitalist funding early on, and now Google operates its own venture capitalist firm known as Google Ventures.
Other well-known online companies that have succeeded with the help of venture capitalists are Facebook and Groupon, which raised an astounding $950 million before going public earlier this year.
The Next Big Thing
When deciding what companies to invest in, venture capitalists are very cautious, doing an extensive cost-benefit analysis for each opportunity. Investing in startups certainly has its risks, but when done right, these investments can pay off big time.
Venture capitalists are always on the lookout for new opportunities. According to the Wall Street Journal, some up-and-coming tech companies that are, at the moment, receiving big contributions from venture capitalists are Etsy, a make-and-sell craft site, and Castlight Health, which offers web-based software to help employees compare healthcare costs.
Venture capitalists have helped some of the most-recognizable names in the online marketplace become majorly successful and have made a lot of money themselves along the way. Only time will tell whether these newer companies can reach the success of Google or Groupon.
