Not all venture capitalists inject funds in every industry. Some have preferences for particular stages of investment, amount of investment, industry sectors, and geographical location.

Follow these simple steps to identify the most appropriate venture capitalist that can meet your requirements:

Step 1: Study the particular investment preferences set down by the venture capital firm.

Step 2: Contact the venture capital company on the short-listed potential venture capitalists list and request for a copy of their own publications to learn more about the type of investments they favour.

An investment in an unlisted company has a long-term horizon between four and six years. Select venture capitalists with a potentially good working relationship. Often businesses don't meet their cash flow forecasts and require additional funds, so an investor's ability to invest further funds if required is also important.

Step 3: Look beyond the amount and terms of investments. Entrepreneurs must also consider the additional value that the venture capitalist can bring to the company such as industry knowledge, fund raising, financial and strategic planning, mergers and acquisitions, and access to international markets and technology.

Nevertheless, venture capital is not suitable for all businesses, simply because venture capitalists usually look for:

• Superior businesses
  They seek companies with superior products or services targeted at fast growing or untapped markets with a strong strategic position. For leveraged management buyouts, they seek companies with high borrowing capacity, stability of earnings and an ability to generate surplus cash to quickly repay debt.
  
  
• Quality and depth of management
  Venture capitalists must be confident that the company has the quality and depth in the management team to achieve its aspirations. Venture capitalists seldom seek managerial control as they prefer to add values to the investment such as fund raising, mergers and acquisitions, international marketing and networks.
  
  
• Corporate governance and structure
  Most of the time, the introduction of a venture capitalist is preparatory to a public listing. The venture capitalist must be assured that the investee company has the willingness to adopt modern corporate governance standards such as non-executive directors, including a representative of the venture capitalist.
  
  Venture capitalists will stay away from complex corporate structures without clear ownership and where personal and business assets are conveniently merged.
  
  
• Appropriate investment structure
  Besides an attractive business opportunity, venture capitalists will also seek to structure a satisfactory deal to produce the anticipated financial returns to investors.
  
  
• An exit plan
  Lastly, venture capitalists look for the clear exit routes for their investment such as public listing or a third party acquisition of the investee company.