Venture Capital Investing
Book

Venture Capital Investing

The Complete Handbook for Investing in Private Businesses for Outstanding Profits

David Gladstone and Laura Gladstone
FT Prentice Hall, 2003
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Editorial Rating

7

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  • Applicable

Recommendation

This book is a thorough, practical guide to the nitty-gritty of venture capital investing. This comprehensive, well-organized instruction manual summarizes the homework you should do before you make a venture capital investment, the paperwork needed to carry out the investment and the ongoing work you will have to undertake to have a prayer of seeing your investment pay off. If it is a little plodding, you can understand why. It covers a lot of ground. The authors compare venture capital investing to a partnership at one point, to a marriage at another. They don’t attempt to sell you on venture investing. In fact, by telling you how difficult and labor intensive it is, they may even drive you away. getAbstract.com believes this book definitely belongs in the library of anyone who has ever taken a serious interest in venture investing. It will also help entrepreneurs who need venture capital financing by showing them how to evaluate their companies according to the criteria that serious investors are apt to use.

Summary

Due Diligence

Venture capital professionals exercise due diligence when they consider investing in a business. Due diligence is the process of researching, examining, questioning, analyzing, assessing, pondering, following up and generally scrutinizing with some degree of skeptical attention any investment opportunity before committing funds. If you are thinking of investing in a business, give due diligence its due. Demand the following:

  • Proper presentation of relevant numbers - Look for accurate, comprehensive data presented according to generally accepted accounting principles. Assure yourself that the entrepreneurs understand their own numbers and can discuss them in detail. If they don’t know much about accounting, they should hire a professional accountant to prepare a properly formatted accounting statement. Don’t only examine the past but also look toward the future. The entrepreneurs should assemble a five-year forecast. If the business is not yet making money, ask for a schedule explaining when it will be profitable. If the entrepreneurs or managers don’t understand the numbers, aren’t comfortable discussing them or otherwise show an aversion to this...

About the Authors

David Gladstone is CEO and chairman of Gladstone Capital, which he founded. He is the author of Venture Capital Handbook: An Entrepreneur’s Guide to Raising Venture Capital.Laura Gladstone is a principal in Gladstone Capital.

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