Most venture capital firms pride themselves in being a “value add”, contributing more than just capital to an entrepreneur’s business. This term has become a loosely used buzz word, yet (all sarcasm aside) it is an important consideration for the entrepreneur to contemplate.

Venture capitalist are able to greatly contribute through the following:

• A VC firm has dealt with hundreds of companies and seen thousands of business plans. This experience translates into high level operating knowledge such as strategy and product roll-out down to market research and competency of business plan construction.
• VCs are well networked as the best deals are usually found through their contacts. This network works on the giving side as well as the receiving in the sense that many executive hires for portfolio companies and fellow co-investors can be generated through this web.
• The fund portfolio can often contain companies with possibilities for synergies, which can easily be facilitated through the venture capitalist.
• VCs are often up-to-date on changes in the industry and can update portfolio companies during board meetings.
• Often venture capital funds are supported by advisory boards that consist of industry experts and successful entrepreneurs, willing to give advice to the VCs and CEOs.
• Most likely the venture capitalist has been part of an exit, if not a handful of exits. This experience allows the VCs to guide an upcoming exiting company to an investment banker or strategic buyer and then help in the negotiation process.

The ideal situation would be for an entrepreneur to have enough time to analyze the venture capital firm as the venture capital firm completes its due diligence. An investment is definitely a marriage and needs to be contemplated from both sides. Yet this can obviously be easier said than done as often a business plainly needs capital to continue to operate.