VCs Venturing into New Territories

More venture capitalists are moving into new territories. The majority of VC firms still stick with established ventures looking for later stage funding, but some are starting to specialize in niche financing markets.
National Dialogue on Entrepreneurship points out that there is a shift to more VC funds going into start-ups. There are a significant number of start-up focused VCs listed in the Entrepreneur magazine Top 100 Venture Capital firms.
The challenge for start-ups getting VC money is that VCs are, by nature, very impatient. They want growth rather quickly and they expect you to hit your projections and hit them on time. If not, they will fire you and hire someone they believe can make your concept meet their expectations.
NDE also links to the web site of a VC firm that is focusing on funding businesses wanting to franchise a business model. From the web site:
“Franchising Ventures Group is comprised of a group of individuals who have extensive experience in business-building, franchising, marketing, and finance. In the course of investigating an array of possible business ventures and market opportunities, they became convinced that many companies had great potential for franchising but that most would never reach that potential.
“The reasons were twofold: one, these businesses lacked the capital to mount an effective franchise marketing campaign, and two, they did not have adequate management personnel to both manage the original business and develop, market and manage a franchise program.
“To us, the next step was obvious – form a venture to provide the capital and the skilled management needed to create, market and manage franchise programs in a joint effort with companies that had the potential for great success.”
Franchising a business concept is a risky endeavor, with litigation rates quite high even with successful franchises. Franchisees get restless and quickly believe the fees they pay are not worth what they get in return. So if you pursue VC funding for a franchise be ready to be stuck between a rock and a hard place as the VC expects quick growth and each of your growing number of franchisees expect you to treat them with specialized attention in return for the fees they pay you every month.