Venture capital (VC) firms provide funding for companies that need capital to meet their goals. Usually, VC firms provide this funding in exchange for stock in the companies in which they invest. Once a VC firm invests in a company, it usually continues to assist the company by providing advice. Often, two or more VC firms will work together to put together a financing package and will co-invest in the same company, on the same deal terms. Venture capital investments can range in size from less than $1 million to tens of millions of dollars.
Over the past five years, an increasing number of VC firms have shown an interest in investing in companies that provide low and zero-emission transportation solutions. Today, venture capital for energy companies accounts for nearly 5% of total venture capital investments annually and a growing number of businesses led by a new generation of energy entrepreneurs are developing technologies and services for the changing energy marketplace (source: Nth Power). VC firms with interests in alternative energy sources are the most likely to invest in zero-emission transportation companies.
An entrepreneur or company seeking a VC investment should prepare a high-quality business plan and be prepared to send it to as many VC firms as possible, as VC firms only invest in a very small fraction of the companies who contact them. It’s not unusual for a VC firm to review five to ten proposals each week, but to only invest in this many companies in a given year. For example, Nth Power (a leading VC firm in the energy sector) receives and reviews business plans from more than 500 energy-related businesses each year and will normally invest in only 3 - 6 of these companies.
TransPower personnel have extensive experience dealing with venture capital firms, especially those that focus on alternative energy and zero-emission transportation systems. TransPower personnel have personal relationships with analysts at many VC firms, and can assist client-partners in selecting and contacting VC firms. TransPower can also assist entrepreneurs and companies in developing business plans and presentations of the quality and in the types of formats expected by VC firms.