Inside the Venture Capital process

Although this post is not exactly about healthcare IT, it is about enabling healthcare IT by getting some money for your startup. I talk regularly to entrepreneurs who pitch ideas (which is one of my favorite parts of blogging) and many of them aren’t sure how to get their ideas funded. Having been through several money raising rounds in my previous startups I recommend not raising money from VCs unless you have absolutely no choice; use angel money, bootstrapping, etc. However, sometimes professionals will be the best choice if you need “smart money” from a good VC.

Here’s a good perspective of the VC process: The Post Money Value: Inside the process.

A great list of characteristics for you health IT startup dreamers was put together by Sam Decker:

1. Defendable and differentiated
2. Competitive cost structure
3. Attractive partnership opportunities
4. Repeat customers
5. Word of mouth opportunity
6. Memorable product and name
7. Potential for PR
8. Attractive to be bought or merged
9. Scaleable staff and systems
10. Scaleable product — build once, sell many times
11. Uncomplicated
12. Focus
13. Niche market or fragmented industry
14. High velocity and large market / industry
15. High perceived value
16. Product can be accessorized – revenue synergies
17. Healthy cash flow –> margin x velocity
18. Demonstrable felt need, demand – does it hit a primal chord?
19. Business can be measured for improvement
20. Can claim leadership
21. Sales model is scaleable and predictable
22. Product evokes emotion
23. Can make big wins – big customers
24. Limited exposure to legal issues
25. Own relationship with and information about customers