If your company has grown to the point where it requires more funding than is available through angel investors to reach its next set of objectives, seeking funding from venture capital will most likely be your next step. While your previous investing rounds may have primarily involved friends, family and angel investors with industry-related experience, the next phase of your fund raising rounds will involve the presentation of your business to investment professionals with no emotional link to you, your business, or your industry.

Venture capital investors (also known VCs), on the other hand, will take a very objective view of your business and make their decision to invest based on a variety of parameters and benchmarks that are specific to each firm. Generally speaking, these parameters and benchmarks include:

• A product that solves a big problem – VCs are looking primarily for products that are necessary solutions for pressing problems. On the other hand, if you're offering a service, the VCs will take a pass and not look back. The preference for products is based on fact that products can be protected as intellectual properties with patents, etc., whereas services are easier to reproduce and more difficult to protect.
• The potential for big returns - Because of the overall risk profile of each investment made by a VC, a company must have the potential for a return of 500% to 1000% within four to six years to compensate for companies in their portfolios that don't reach their objectives.
• A big market for the product that will continue or accelerate its growth rate – This is a calculation that can have a lot of moving parts, but the minimum benchmark for the product's market size for most VCs starts around $500 million. A target market of this size would be required to feasibly support another significant benchmark; the potential to reach at least $50 million in revenues within a timeframe of 4 to 6 years.
• A product that plays a role in the industries that are anticipated to experience high growth rates over the next decade – According to the National Venture Capital Association (NVCA), investment areas that are anticipated to show the highest growth rates and attract a growing percentage of VC funding include IT products for commercial enterprises and healthcare while the alternate energy and biopharma sectors will experience decelerating growth and investment.

In this relatively cool environment for investing, companies seeking VC investments need to aggressively pursue their own objectives as well as those required by venture capital firms. At this point in time, only the best of the best are attracting investment, which raises the bar for companies requiring investment levels of $5 million or more.