Larry Scheinfeld: The Politics of Silicon Valley

For the past two decades, startups have been a major driving force of innovation. Companies such as AirBnB, Seamless, and Uber have dramatically reshaped our economy as they made life unprecedentedly more convenient. Unfortunately, innovation often comes with a hefty price tag, which is why many of today’s most exciting startups have turned to venture capital to fund their businesses. But where large sums of money are involved, politics inevitably follow. Here is a quick guide to what you need to know to push past them and seal the deal.

startups in silicon valley have to deal with politics in Silicon Valley

It’s all about numbers. Less than one out of every 10 startups is able to receive venture capital. This is because venture capitalists are not about small loans. They seek to invest multi-millions of dollars in exchange for returns that are even bigger. The markets they invest in also have to be quite big and display huge potential. Therefore, companies seeking somewhere between $10,000 and $100,000 should look for angel investors, who like to contribute smaller sums. Companies that need more than $100,000 but less than $1 million should consider attracting micro-VCs, investment funds of between $10 million and $50 million who are more likely to make smaller contributions.

Get the right advice and assemble the best team. The best politicians are surrounded by dozens of advisors who refine everything from the clothes they wear to the words they say. The same is true of companies. Prior to reaching out for venture funding, attend a conference in which you can pitch your ideas to a panel that will critique them to give you valuable feedback about the things you’re doing well and the things you should improve to make your organization more attractive for venture funders.

Additionally, build your company with a trusted team. Seasoned leaders will help venture capitalists feel confident in the ability and stability of your company. Venture capitalists also look for leaders who display tenacity, drive, flexibility, and knowledge.

You need the right setup. Politics is a lot like dating. Like they would help you get a second date, the qualities of being polite, presenting a compelling persona, and just generally putting the best foot forward may help you secure a second-look from a major venture capital fund. However, getting the first date—the venture capital firm’s first look at your company—often takes the right setup or recommendation. Also, remember that venture capitalists take a lot of time to consider their investments even after a successful introduction, so be prepared to “wine and dine” as necessary by providing required information and finding the best way to sell your vision.

Remember that dating is meant to be fun! A lot of companies make the mistake of presenting their organizations as too serious. Of course, professionalism and a solid business plan are important to securing a venture capital investment, but venture capitalists also want to work with companies that run on passion. You are not just asking for money to grow a business, but for an investment in your vision for the future.