The Little Book of Venture Capital Investing by Louis C. Gerken & Wesley A. Whittaker

Author:Louis C. Gerken & Wesley A. Whittaker
Language: eng
Format: epub
Publisher: Wiley
Published: 2013-12-12T16:00:00+00:00

Expansion Stage—Third Round Financing

As with the second round, most often the institutional VC funds are the front and center players in these Series-C Preferred financing rounds. The company financial requirements vary greatly but are generally around $10 million.

This stage is seen as the expansion/maturity phase of the previous stage. The venture tries to expand the market share they gained in the previous stage. This can be done by selling more of the product or expanding into new markets, and it is usually dependent upon having a good marketing campaign. It is also during this stage that the venture begins to search for efficiencies in production costs and internal processes. A good tool for applying management control is the SWOT analysis. It is used to objectively identify and define the strengths, weaknesses, opportunities, and threats that the venture is facing and to develop a course of action for each, which will maximize the firm’s strategic advantage and minimize the risk that the venture faces.

If it is determined by management that the venture can begin expanding, the development and marketing teams begin to investigate follow-up products and services. In some cases, expansion of the life cycle of the existing product/service is also investigated.

During this stage, the VC firm monitors the objectives already mentioned in the second stage as well as the new objective mentioned at this stage. The VC firm will evaluate the effectiveness of the management team’s ability to reduce costs. It also analyzes the venture’s competitiveness in the marketplace and consumer adoption of follow-on products and services.

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