In this guide by Apogee Accelerator Group, you'll discover how VC works, the difference between venture capital and private equity, and whether you should choose venture capital or angel investment. You'll also learn how blockchain is changing the future of investment and what it means for VC.

1. A Quick
Guide to
Venture
Capital (pt. II)
In this guide, you'll discover: how VC works, the difference between
venture capital and private equity, and whether you should choose
venture capital or angel investment. You'll also learn how blockchain
is changing the future of investment and what it means for VC.

2. What We Do Best
A quick summary of our services:
Identify and Facilitate
Identify strategic sources of capital investment and facilitate deal closures by
assisting in the Executive Summary, Documenting Sales Process, Building the
Pipeline, Pitch Coaching and introducing clients to the top tier investor groups.
Prepare for the Next Round
Helping drive the valuation of the company to the next round through the
development of Sales and Marketing, Tax Credits, HR Outsourcing
Services, Corporate Governance, Legal Services and Viral Social Media extensions
specific to your business.
Opportunities and Access
Providing partnership opportunities with over a dozen
leading Payroll, Accounting, HR, Marketing Companies, Media
Agencies, and Legal firms at discounted rates to position our clients for rapid
growth.

3. Table of Contents
1. Cover Page
2. Our Services
3. How Does Venture Capital Work?
4. Venture Capital vs. Angel Investment—Which
Is Best for Me?
5. The Difference Between Venture Capital and
Private Equity
6. What Does Blockchain Mean for Venture
Capital?
7. Book A Consultation

4. It’s a Great Time to Seek Venture Capital
Venture Capital is undoubtedly one of the greatest driving forces behind innovation and
growth in the US economy. After all, it was the combination of brilliant ideas from
entrepreneurs and investment from VCs that gave rise to tech startups like Google and
Apple, turning Silicon Valley into a hotbed of economic growth.
Currently, Venture Capital is at an all-time high. In 2018, Venture Capital funds are larger and
more numerous than ever before, resulting in a record-breaking number of VC-backed
startups reaching over $1 Billion in valuation. These companies are generally referred to as
“Unicorns,” due to their incredible rarity. However, we are starting to see these companies
become more common, turning the term “Unicorn” into somewhat of a misnomer.

5. From this year into the following, Venture Capital remains an increasingly appealing option
for startups and small businesses who want to reach the public market. And there couldn’t
be a better time to approach potential investors.
What Is Venture Capital?
To understand how Venture Capital works, we should first define what it is.
Venture Capital is a form of financing that investors give to startups and small businesses
that show long-term growth potential. Investment in these types of companies is often risky
but can also result in an above-average return on investment. A monetary investment could
come from wealthy investors, investment banks, or other financial institutions in return for a
piece of equity in the company.
Since Venture Capitalists are taking a risk by investing in your company, you’ll find yourself
going through a long and tedious process to get the capital you need. However, to get your
foot in the door and achieve the social proof you need to receive an audience, having the
right connections is of utmost importance.
Given that you find a group that will take you under their wing and will help you navigate
the process, these are the steps that you’ll take to receive VC funding:
6 Steps Toward Venture Capital
Step 1: Identifying Sources of VC
The first step toward receiving funding from a VC is identifying groups that share your vision
and are most likely to invest in you. Research VC groups and find out what causes they
support and what types of startups they’ve supported in the past. Choosing a VC solely
based on the amount of money they have is a mistake. Rather, you’ll want to look for groups
that can provide you with guidance and mentorship that will help your business grow.

6. Step 2: Meeting Venture Capitalists
One of the most effective ways of meeting Venture Capitalists is by receiving an introduction
from entrepreneurs that have historically made great deals with them. By personally
introducing you to a VC and putting their seal of approval on you, an intermediary can help
you get through the door and greatly increase your chances of getting a deal. At this point,
you’re not guaranteed a deal, but you’ve at least received the social proof you need to enter
the boardroom.
Step 3: Picking up the Phone
If your introduction goes well and you pique the VC’s interest, you’ll most likely receive a
phone call. From here, you’ll get in contact with a partner who will ask you to send them a
presentation which is called a “pitch deck” in the world of investment and Venture Capital. If
the partner really likes your pitch deck, you’ll receive an invitation for a face-to-face meeting
in their office.

7. Step 4: Meeting the Partner
During this brief meeting, you’ll have the opportunity to connect with the partner on a
personal level and find the things you and they may have in common. You’ll also be asked
questions regarding yourself and your business. If you answer them satisfactorily, you will
make it to the last stage of the decision-making process: the partners meeting.
Step 5: Attending the Partners Meeting
This is where you’ll finally get to present your big idea to all the partners in the VC firm and
hopefully win the deal. Most likely, the partner with whom you’ve had contact until this
point has spoken well of you to the other partners, making your chances of winning the deal
much higher. Once you’ve given the presentation and convinced the other partners to invest
in your idea, you’ll receive a term sheet.

8. Step 6: Signing the Term Sheet
While the term sheet may be a promise to give you financing, it is also a non-binding
document. After you sign the term sheet, the VCs will take between 1 to 3 months to
complete their due diligence. At long last, you’ll receive the funding you need and get the
capital dropped in the bank after the offering documents have been signed and executed.
Conclusion
Without the right connections and mentors to guide you through the process, obtaining
Venture Capital can seem like an impossible task to accomplish. With so many gatekeepers
and decision-makers standing between you and the capital your business needs, you simply
can’t do it alone.

9. At Apogee Accelerator Group, we work with promising startups and small businesses and
guide them through each step of the VC funding process.
First, we start by assisting you with the executive summary, documenting the sales process,
and building the pipeline. Then, we help you create a pitch deck and coach you on how to
successfully present your idea to investors. Finally, we connect you with top-tier investor
groups and prepare you to close the deal.
To learn more about Apogee Accelerator Group and how we can help you get Venture
Capital funding for your business, visit our page.

10. Venture Capital or Angel Investment?
As an entrepreneur with a growing startup or small business, you may have come to the
conclusion that you need capital to take your company to the next level. Furthermore, you’ve
considered approaching either Venture Capitalists or Angel Investors for said capital, given
that they have a higher chance of taking the risk to invest in your idea than an investment
bank would.
Now that you’ve narrowed it down to two options; Venture Capital and Angel Investment,
how do you determine which one is right for you?
Let’s examine the differences between these two alternative sources of funding:
Angel Investment
An Angel Investor is typically a wealthy individual that invests their own money into a
company. They look for companies in the earliest stages and tend to put down amounts
ranging from $25,000 to $100,000. Angel Investors may even come together as a group and
invest as much as $750,000 when pooling their resources.

11. Despite investing lower amounts, Angel Investors are less risk-averse and often invest in
companies when others would rather play it safe. Angel Investors may be successful doctors,
dentists, lawyers, and other business professionals that like to invest in startups to see a
good ROI and live vicariously through them. This, of course, is not true of all Angel Investors,
but it’s a notable trend that can be seen within the Angel community.
Another observable trait of Angel Investors is that they seek a larger share of your business in
return for investment and generally won’t do so without a sizeable equity stake. If you’re
unwilling to give up a good chunk of ownership in return for funding, Angel Investment
might not be the best choice for you.
Angel Investors are usually unable to offer investments of over $1 million due to the fact that
they are using their own personal funds and don’t have the resources of a larger investment
group. The qualifications to be considered an accredited investor are much lower as well,
with just a minimum net worth of $1 million and minimum annual income of $200,000.
Venture Capital

12. Unlike Angel Investors, Venture Capital groups are made up of professional investors who
manage the pooled funds of individuals, corporations, foundations, and pension funds. As
well as having more money to put on the table, Venture Capital groups aren’t as easy to
convince, since they have to answer to the individuals who entrust their money to them.
They’re also seasoned professionals with decades of experience investing in startups and
small businesses; investing is their day job.
According to the data, the average Venture Capital deal size in the US is $7 million, which is
substantially larger than the average Angel Investment deal of $300,000. The average size of
VC deals has also skyrocketed recently, making 2018 a historic year for Venture Capital. In
other words, the timing couldn’t be better for startups and small businesses looking for
assistance from VC groups.
In addition to large capital injections, you’ll also receive top-notch guidance and advising to
help you maximize profits. One of the greatest advantages of working with Venture
Capitalists is the ability to work with true experts who know what it takes to run a successful
business.
Which One Should I Choose?

13. For early-stage companies that are okay with giving equity to an investor and need an
investment of less than $1 million, Angel Investment is a great choice. It’s an especially useful
option for businesses who need capital to get off the ground, yet are unable to find other
alternative sources of funding due to high risk.
Venture Capital, on the other hand, is perfect for more established companies that have a
good track record and promising financials—especially those that show plenty of room for
growth and have also demonstrated they have what it takes to succeed in the future. A VC
deal may get you anywhere from a few million dollars to hundreds of millions, depending on
your ability to convince investors.
To acquire funding from either an Angel Investor or Venture Capital Group, you’ll have to
prepare a compelling case and know how to effectively pitch your idea. Although similar to
seeking an Angel Investor, Venture Capital is a game with higher stakes, bigger players, and
much more money on the table. So, if you want to sit down and play with the pros, you’ll
need to show up with the right cards up your sleeve.
Apogee Accelerator Group does just that. We specialize in taking businesses from $10 million
to $100 million in valuation and also from $100 million to $1 billion in valuation. We prepare
your business for Venture Capital by assisting in the executive summary, documenting the
sales process, building the pipeline, coaching you for the big sales pitch, and introducing you
to top-tier investor groups.

14. The Difference Between VC & PE
Aren't Venture Capital and Private Equity the Same Thing?
Many times, the words Venture Capital and Private Equity are uttered in the same breath,
often giving the layman the impression that the two terms may be equal or synonymous.
VC and PE are two major subsets of the private market that focus on raising capital, investing
said capital in private companies, and increasing the value of the company in hopes of
selling it for a profit down the road.
Although both VC and PE firms serve a similar function, the types of companies they invest
in, the point at which they get involved, and the percentage of equity they ask for in return
vary greatly.

15. Venture Capital firms choose to work with younger companies and startups and provide
them with mentorship and guidance in addition to financial support. They ask for minority
equity in the startup that they invest in and VC firms also tend to invest in tech startups more
than startups from any other industry.
Private Equity firms, on the other hand, are less “venturous” than Venture Capital firms and
prefer to invest in well-established companies in traditional industries. Since Private Equity
firms come into play much later in a company’s life cycle, a startup that was initially backed
by a VC firm may end up being bought out by a PE firm, a few years later. Unlike VC firms,
however, PE firms ask for a majority stake in the company or full ownership.

16. Private vs. Public Markets
When we talk about the private market, we refer to the market in which private investors and
wealthy individuals are able to fund startups and young companies that haven’t yet reached
the public market. In contrast to the private market, the public market includes the forms of
investment which we are all familiar with, such as stocks and bonds. As its name suggests,
the public market is not just exclusive to wealthy individuals—it’s available to everyone.
This then raises the question, why are companies spending more time in private markets and
not going public as quickly as they used to? After all, stocks allow businesses to split up their
equity into pieces and essentially crowdfund their investment efforts. Doesn’t the public
market contain a much larger amount of capital?
While going public used to be the most common course of action for young companies,
many are choosing to go to private markets for a few reasons.
First, private markets are becoming flooded by investors and available capital, meaning that
large sums of capital can be raised without ever going public and releasing an IPO. Second,
the increasing popularity of Venture Capital and Private Equity have made it even easier for
new companies to enter the private market and find investors. In other words, the growth of
the private market has been fueled by a growth in the supply of capital, with demand
following closely behind it.
There also happen to be a few benefits to staying private rather than going public. Private
companies don’t have to answer to public shareholders and have a higher degree of
freedom when making decisions. They’re also not obligated to disclose financial statements
and earnings reports, allowing them to keep this information from competitors.

17. The Role of an Accelerator in Venture Capital
Like we discussed in our article, “How Does Venture Capital Work?“, an accelerator’s job is to
prepare startups to approach venture capitalists and give them the tools they need to
convince all of the partners of a VC firm to invest in them. This involves preparing an
executive summary, documenting the sales process, building a pitch deck, presenting to a
board of investors, and much more.
Even if you’re fully prepared to pitch your idea to investors, finding the right VC firm and
getting your foot in the door is half the battle. The exclusivity of the private market makes it
much more difficult to break into, in contrast with the public market where anyone can
provide you with capital.
At Apogee Accelerator Group, we not only work with your business to make it appealing to
investors but we also introduce you to our best of breed partners and help you close the
deal. For this reason, we’ve often been described as “LinkedIn meets Sequoia Capital” for
every type of entrepeneur—seasoned or not.

18. What Does Blockchain Mean for Venture
Capital?
Blockchain and Bitcoin
When Bitcoin first came onto the scene in 2009, many economists and investors scoffed at
the idea of cryptocurrency, noting a lack of regulation or intrinsic value. Today, the Bitcoin is
valued at a whopping $3,256.13 and hundreds of copycat currencies have followed in its
wake. At its highest point, Bitcoin was even valued at a record-breaking $19,783.06.

19. Although the use of Bitcoin and other unregulated cryptocurrencies has become more
widespread, it’s not the currencies themselves that are making the biggest impact, but
instead, the underlying technology that makes it all possible: blockchain.
Blockchain is essentially a digital ledger that prevents both cryptocurrencies and
transactions from being duplicated, forged, or tampered with. Everyone that is part of the
P2P (Peer-to-Peer) network has their own copy of this ledger. Periodically, the network
checks for inconsistencies and makes corrections.
This is extremely important to note because it means that there is no single point of failure
for blockchain. If someone were able to tamper with a ledger, there would still be millions of
users that have the untampered version. As soon as the network detects an anomaly, the
tampered ledger is corrected.
Just like how every dollar in your pocket has a unique serial number, a Bitcoin is identified by
a special algorithm that takes a lot of computer processing power to generate. It’s infinitely
more complex than a serial number and simply can’t be replicated. Every transaction made
on the network is also given a unique ID and validated by every member of that network.
To use a simpler example, imagine logging in to your online banking account to find out that
you’re missing 1,000 dollars. When you call the bank, they have no record of those 1,000
dollars ever entering or leaving your account. Someone has hacked your bank and has
corrected the bank’s digital ledger to hide any trace of them taking your money.
With blockchain technology, millions of people have this ledger on their computer with
every transaction and every dollar (or cryptocurrency) in the world accounted for. The serial
number (algorithm) of every dollar is also recorded on the ledger, meaning that every single
dollar that is in your bank account is trackable.
When the network performs a check, it cross-references the data with millions of user-held
ledgers and notices that no verified transaction was made, yet the $1,000 is missing from
your account and currently sits in the hacker’s bank account. The network then recognizes
this as an anomaly and puts the money back into your account.

20. Other Applications of Blockchain
Banking, however, is just one application for blockchain. This incredible new technology is
now being used to “democratize” the process of fundraising and could have a huge impact
on Venture Capital. Rather than going to a board of investors and asking for funding from a
small group of partners, one could just crowdsource their investment from millions of people
using blockchain. Each micro-investment could then be tracked and recorded.
In return, a company could issue their own proprietary cryptocurrency to early investors,
similar to a stock (e.g. Uber would issue Ubercoins to investors, which could be traded for a
later profit). This whole concept of issuing cryptocurrency in the place of stocks is referred to
as an ICO or “Initial Coin Offering.”

21. We’ll cover the complexities of ICOs in a later article, but first, let’s analyze what this could
mean for Venture Capital in the future. With ICOs potentially surpassing the popularity of
IPOs, the trading of stocks on the traditional stock market could be made completely
obsolete. Rather than releasing an IPO at the NYSE, one could just go online and offer an ICO
to raise funding, instead.
What Blockchain Means for Venture Capital
Doesn’t this threaten the position of Venture Capitalists and make early-stage investors
obsolete as well? Fortunately, it doesn’t. Although the formality of Venture Capital can serve
as a barrier-to-entry for many startups, it provides much-needed regulation in the
investment market.
In fact, Venture Capitalists may find themselves becoming the sheriffs of this new, lawless
investment market.

22. Many ICO and crowdfunding campaigns can actually be fraudulent, issuing a worthless
cryptocurrency to hopeful investors in exchange for real dollars. Unlike releasing an IPO on
the stock market, issuing an ICO has absolutely no requirements—it’s completely
unregulated. Getting your stock on the NASDAQ, on the other hand, means meeting certain
requirements regarding earnings, assets, cash flow, revenue, equity, and more.
While certainly beneficial to startups and new businesses, blockchain’s lack of regulation
makes it incredibly risky for investors. Venture Capitalists serve as necessary gatekeepers
who evaluate the legitimacy and ROI of an offering before they invest the money of their
partners.
Don’t assume that Venture Capital only benefits investors; startups also have many reasons
to choose VC firms over an ICO. Beyond the money, VC firms offer startups with business
expertise and guidance, additional resources, and connections that affect the long-term
growth and success of a startup.
After all, getting funding is just the first step of many towards running a successful startup.

23. Talk with
Apogee
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of funding?
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quick consultation with Apogee Accelerator Group.