Importance of a Micro-VC Company to Launch a Startup Journey

A hand that holds

Entrepreneurship is a natural step forward for someone with a passion in their heart and a vision in their mind to change the world. First steps can often be both exciting and terrifying: starting and running a business is like raising a child – or just like learning to take those first steps as a baby, both of which require support and a strong will. In the world of entrepreneurship, this strong support often takes the form of the venture capitalist who has the resources and know-how to fuel and guide an entrepreneur’s startup journey. Finding the right kind of support can make or break a company’s growth as it attempts to navigate the stormy seas of business and operational challenges that are sure to arise as a business grows from early stage to full growth stage. In a country like India, a micro venture capital firm does just that by providing the financial support and business advice an entrepreneur needs.

Micro-venture capitalism includes small seed investments provided to start-up companies that have not yet gained traction. It could range from $25,000 to $500,000, which is crucial venture capital that companies need to achieve scalability and build a stable business model. Most active micro-VCs are started by experienced founders who are able to offer support, guidance, and extend business solutions through their own professional networks to these budding entrepreneurs. A micro VC is uniquely equipped to carry out this high-risk, high-return investment model by also offering assistance in terms of managing consumer outreach, attracting larger players for later stages of funding and helping to build the team from the ground up. Beyond capital, a micro venture capital firm with entrepreneurial experience has the experience to hire the right talent, focus on running the business, identify and prioritize the flow of work and the resources and the overall bandwidth of the founders.

Indian start-ups need micro-VCs

According to reports, micro ventures alone have contributed around $341 million to the Indian startup ecosystem over the past 3 years. This growth can be attributed to the quick turnaround time, support, and guidance offered by a micro VC compared to a large VC or institutional investor. In India in particular, venture capital funds or larger institutional funds are not very aggressive in the first round of funding and seed investments are largely driven by micro investment companies. Conversely, in a country like the United States, the pool of investors is huge and even larger VCs come into the picture in the first round of financing or at the early stage, which is not yet the case in India and a micro-VC company has the ability to fill this gap.

Many start-ups fall prey to the misguided pursuit of big VCs on the first attempt, which can often be a daunting task and lead to brilliant business ideas fading away because they don’t get the right kind of attention. and support. A start-up in its infancy should seek more investors with operational experience and economic intelligence beyond simple financing. Currently, there is still a lack of knowledge about the investment landscape and start-up founders are not exposed to the different types of funding options available to them. Before seeking funding, they need to understand the type of players in the market, perform proper analysis, understand what type of investor could really put them on the right path with their business goals, and guide them on their journey. The start-up and investor partnership should be guided by certain values ​​that will ensure mutual benefit and business growth. A micro venture capital firm plays an active role in creating value and, through its portfolio companies, gives entrepreneurs the freedom to use their funding to build a solid foundation rather than just focusing on capital gains.



The opinions expressed above are those of the author.