This transparency in the decision-making process is beneficial. For one, the more entrepreneurs that understand and meet the criteria for VC investment the more options the VCs have in where to allocate their capital.
This is invaluable because to be able to scale-up and make an impact entrepreneurs need capital, and this capital comes from VCs; indeed, a previous Endeavor research effort focused on Chile ranked Access to Capital as the number one challenge in scaling-up. Understanding the exact criteria that Venture Funds use to invest can help entrepreneurs meet those criteria and get the funding they desire.
Understanding what motivates VCs to make certain decisions over others is crucial for designing effective incentives and focus efforts in certain directions.
The funnel is highly selective: VCs invest in only
Of the deals that make it to the funnel,
other VC firms, professional networks, existing portfolio companies, LPs and entrepreneurs in residence.
