Venture Capital

[Account Closed]

Not sure how many have considered using venture capital for their real estate investing. I found this article that gives you an idea of how to peruse this.

http://www.journalofaccountancy.com/Issues/2011/Jun/20113746.htm

For those that have used venture capital maybe you can share something about the experience, pitfalls, or other considerations.

[Darryl Dahlen]

Interesting thought, but as someone who's worked on a couple VC deals, I think the chances of someone actually obtaining VC funds are so slim that it wouldn't be worth the time to try.

VC firms see so many deals it is almost hard to grasp. I talked to one company (in the nanotech sector) that was more than a month behind due to the amount of submissions they receive.

In order to have any real chance of success, you have to use what I call the "shotgun" approach. That is to say you have to submit your deal to as many VC firms that operate in the space you are seeking funds for. No sense sending your real estate deal to a firm that only gets in bed with green energy projects right?

There's also no sense in approaching only a handful of firms and expecting any hope of funding. To me, if you can't approach at least 20 VC firms it really isn't worth the time to try, but that's just me. Personally, as a broker, I wouldn't spend the time on a VC deal if there were fewer than 50 firms I can submit a client's deal to, but that's just my preference.

In the case of one deal I worked on, we submitted the client's deal to over 60 relevant VC firms, and to my recollection, only 20 or so even responded, and some took a month or two to get back to us.

Point being here is the competition for VC money is probably the highest out of any type of financing out there. That being the case, I think there has to be better options for someone who is in need of funds.

Reason I say that is if you have the qualifications to actually obtain VC money you most likely can secure easier money through a JV, line of credit, angel, hard money, etc.