The world of venture capital has changed dramatically over the last few years. Even those who are aware of this change may not be quite sure how it’s affected their own applications. If you’re not familiar with the term, Venture Capital or VC funds are investment companies that invests in startups and early-stage companies.
They also provide general financial support to startups as well as give them access to other businesses that may help them succeed in their fields. Unlike many other industries, there is an increasing number of VC funds available each year and they become more competitive as time goes by.
VC funds invest in startups for the following reasons: 1) To expose themselves to higher startup growth opportunities; 2) To diversify risks through a portfolio of companies; 3) To use investment as a way for technology and knowledge transfer; and 4) To learn about other investment opportunities.
You can read more about what VC funds are and why they invest in startups in this article.
Read on to know more about what VC funds do and the list of top 10 best VC funds in the US.
What Are VC Funds Looking For In A Startup?
If you feel like your startup is one of the best in the world, don’t let that feeling get the best of you. VC funds are looking for a certain set of factors to come together in order to be successful.
Most venture capital firms look for three things when evaluating applications: the ability to generate returns, the likelihood that the company will exceed expectations and alignment between the applicant and the investors.
When applying to a VC firm, you’ll often be asked to submit a letter of application. This letter will go over the steps in your business development and outline how you’re going to generate returns for your investors.
There are a number of ways to approach the letter and include a few examples. First, choose three startups that you admire and that show promise in their respective fields. These don’t need to be the same companies that are actively funding or getting funding from the VC firm. Next, explain how you plan to benefit from working with the VC firm. What do you expect to get out of the partnership?
Once you send the application, it takes a couple of weeks for the VC fund to come back to you with an initial answer.
Below we list the top 10 VC funds in the US.
1. Sequoia Capital
You’re probably familiar with this name if you’ve looked into venture capital funds in the US. Sequoia Capital is a pioneer in the venture capital industry and has funded thousands of companies since 1980.
The venture capital firm Sequoia invests in startups in the energy, finance, enterprise, healthcare, internet, e-commerce, and mobile sectors. The company supports a select group of risk-taking yet super-ambitious founders in creating storied businesses. They are motivated by pushing the limits of what is feasible.
Sequoia Capital has had very successful exits such as Google, Nvidia, Instagram, LinkedIn, WhatsApp and Zoom. When acting as the main investor, Sequoia Capital’s already impressive investment-to-exit ratio of 20.71% soars to a whopping 63%.
Don Valentine established the business, which has its headquarters in Menlo Park, California, in November 1972.
Getting funds from Sequoia is very competitive and needs a lot of preparation and great networking with the company.
2. Kleiner Perkins
American venture capital firm, Kleiner Perkins, specializes in funding start-up, growth, and incubator businesses.
Kleiner Perkins invests specifically in start-up, early-stage, and growing firms. The company has supported entrepreneurs in over 900 enterprises since its establishment in 1972, including Amazon.com, Electronic Arts, Square, Genentech, Google, Netscape, and Nest.
It raised about $9 billion by 2019 through 19 VC funds and four growth funds.
The company carries on that tradition by investing in founders with innovative ideas that cut across sectors and continents, working with them from the beginning to the IPO and beyond to realize the full potential of their concepts.
Additionally, they emphasize how early computer companies used their hardware, software, and service providers. It also makes investments in the healthcare, life sciences, and digital sectors.
3. Andreessen Horowitz
Another well-known venture capital firm, Andreessen Horowitz has funded many companies that later went on to become household names.
Many of the earliest companies in the tech industry have received funding from this firm, including Facebook, Airbnb and Uber. They’re known for investing in very early-stage companies and look for partners that can help bring their investments to the next level.
Andreessen Horowitz is a venture capital firm that specializes in seed, start-up, early, mid-stage, growth, and late stage investments. It prefers to invest in the social media business and technology sector, concentrating on software, back-end infrastructure, Internet infrastructure, cloud computing, enterprise software and services, and consumer.
Additionally Andreessen Horowitz has invested in other fields such as business Internet, mobile-Internet, consumer Internet, cloud computing, data-storage, social network browsers, consumer electronics, networking functions, software related biology, biotech, and medical companies at the intersection of computer s and social media.
4. Accel
Accel focuses on supporting early start-ups for software, mobile technology, corporate, and internet companies and is now active in the US, UK, China, and India. When acting as lead investor, the firm’s impressive investment-to-exit ratio, which is 20.77%, rises to 55.56%.
An illustration of this achievement is Accel’s 2019 Series A of businesses from Europe and Israel, which raised $3 billion for the company.
Accel has made investments in thousands of start-ups around the world that have developed into enormous successes. Etsy, Facebook, Spotify, Dropbox, and other well-known startups are just a few of the most well-known businesses this firm has backed.
5. Intel Capital
Intel Capital is one of the premier VC funds in the world. Intel Capital, the venture capital division of Intel, was established in 1991 and has expanded to operate in the US, China, Western Europe, and Israel.
In general, this company focuses on financing technology-based startups, including companies that use artificial intelligence (AI), software security, 5G communications, robots, semiconductor manufacturing, and more.
Having a 28.5% Investment-to-Exit Ratio, Intel Capital’s results are outstanding. Thousands of start-up enterprises have received funding from the corporation throughout the years as a lead investor, and more than 83% of them make it to the initial public offering (IPO) stage.
Overall, Intel Capital is a remarkable venture capital business focused on technology that has a strong investment track record. The most well-known of their investments include Broadcom, Citrix Systems, and WebMD.
6. Bessemer Venture Partners
Bessemer Venture was established in 1974 and initially centered its operations on the steel sector. The company, which boasts exceptional returns on investment, has since moved its focus to supporting consumer technologies and the health sector. Bessemer Venture has a 21.65% investment-to-exit ratio overall.
This venture capital business excels in particular while playing the lead investor. For instance, 63.75% of the 34% of deals in which they were the principal investor turned out to be profitable ventures. The company has made some of its largest investments in companies like Pinterest, Shopify, Yelp, LinkedIn, and Skype.
Bessemer Venture is still a major, international venture capital firm that has raised a total of $6 billion through investments.
7. Khosla Ventures
Founded in the United States by Vinod Khosla, Khosla Ventures specializes on early-stage investments in the Internet, computers, mobile, financial services, agribusiness, healthcare, and clean technology industries.
Khosla Ventures is one of the youngest companies on the list, which may explain in part why its investment-to-exit ratio is noticeably lower than that of the other companies included in this list. Khosla Ventures was established in 2004 and has already invested in a significant 707 companies, totaling over $5 billion in AUM.
With a current investment-to-exit ratio of 13.58%, this venture capital firm has concentrated its efforts on China and the United States. The most impressive investments made by Khosla are those in DoorDash, Instacart, Academia.edu, and Square.
8. GV Ventures
The venture capital division of Google’s parent firm, Alphabet Inc., is called GV Ventures. Bill Marris established GV Ventures in 2009 under the name Google Ventures as one of the leading VC funds.
With a 100 million dollar investment, Bill Marris founded GV Ventures, and according to recent data, the business has expanded rapidly since then. GV Ventures was interested in seed, late-stage, and early-stage funding but has since turned its attention to mature businesses.
GV Ventures is in charge of more than 8 billion dollars’ worth of assets, including more than 300 active enterprises. It should come as no surprise that the organization has managed over 168 mergers and acquisitions and around 48 IPOs.
Uber, Medium, Slack, GitLab, Cloudera, and many other companies are among those that have received sizeable investments from GV Ventures.
9. Tiger Global Management
Since its founding in 2001, Tiger Global Management has expanded to collect an incredible $50 billion in assets under management (AUM).
Tiger, which has offices in New York, Hong Kong, Beijing, Singapore, and Bangalore, generates a large amount of revenue every year. In fact, the company returned $10.4 billion to its investors in just 2020. It’s not surprising that Tiger appears on a list given its status as a venture capital powerhouse.
It’s important to note that compared to some other companies on this list, Tiger Global Management invests in a wider variety of start-up companies.
For instance, the company has a history of making investments in the financial technology, consumer, and software sectors. Credit Karma, Coinbase, Facebook, and Google are a few of their most well-known investments.
10. Insight Partners
Another private equity company in the top 10 venture capital firms list for 2022 is Insight Partners. In 1995, Jerry Murdock and Jeff Horing launched Insight Partners. The business is headquartered in New York City.
Insight Partners invests in software and online businesses in their early, growth, and late stages. According to the company, it has a sizable portfolio of scalable software businesses and a team dedicated to software.
Pluralsight, Shopify, DeliveryHero, Salesloft, Smartsheet, and other companies have received funding from Insight Partners.
Over $30 billion has been invested in businesses through venture capital. Additionally, insight partners show interest in 200 portfolio acquisitions and over 400 primary investments.
Insight Partners has roughly 779 investments and reports about 176 exits, according to Crunchbase.
Final Words
The information presented here is intended to be a brief introduction to VC funds. It’s important to remember that the business development process is highly competitive, and the best way to be successful is to spend time researching and learning about funding opportunities in your industry.
There are many ways to stand out from other applicants, including learning about the different types of funding available, understanding your value proposition, creating a compelling elevator pitch and more. In another article, we explain what you should do next once you have created a high-quality business plan to successfully attract VC funds.
We recommend investing the time in learning about venture capital funds and applying for one that may work well for your business.
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