Rodney Adler

CapitalRelated: Short term financing

Venture capital

Capital and advice for early-stage firms on the cusp of high growth.

40 years as a venture capitalist

Everyone has their own definition

I've been a venture capitalist for 40 years. Everyone in the industry has his/her own definition of what venture capital is. Frequently people confuse venture capital with seed capital, with private equity investment, with angel investors, with just straight equity investment. Truthfully, to me they all overlap to a certain extent. Over the years venture capital has changed due to a dearth of capital to significant availability of capital. Everything goes in cycles and the venture capital industry is no different.

Rodney Adler

Venture capital at the centre, overlapped by seed capital, private equity, angel investors and straight equity investment. VenturecapitalSeed capitalPrivate equityAngel investorsStraightequity
“Truthfully, to me they all overlap to a certain extent.”
A wave moving between a dearth of capital and significant availability of capital.AvailableDearthAvailableDearth
Venture capital has moved from a dearth of capital to significant availability of capital. Everything goes in cycles.

Venture capital, private equity, angels

Venture capital is a type of private equity, a form of financing that is given to early stage, emerging firms that are invariably on the cusp of high growth or have demonstrated high growth. They are frequently in the new technologies, but they are not limited to any industry — it is much more important to concentrate on the goals and aspirations of the company and the inspiring management. Venture capitalists buy a percentage of the company and support the entrepreneur and the management team, whereas private equity more than frequently buy 100% ownership of the company in which they invest. There has also been much discussion about the difference between venture capitalists and angel investors, and to the best of my knowledge the difference is mainly that venture capitalists operate through a company/firm and may use other people's money and frequently do, whereas an angel investor will be an individual, often a high net worth individual who is diversifying his portfolio or stretching his business opportunities.

Rodney Adler

Venture capitalist

Ownership

A percentage of the company

  • Operates through a company or firm
  • May use other people’s money, and frequently does
  • Backs early stage, emerging firms on the cusp of high growth
  • Supports the entrepreneur and the management team

Capital, and the advice that matters as much

I like to think of a venture capitalist as a person who hears and understands the dreams of other business professionals and tries to help that business professional achieve their dream. The role of the venture capitalist is in my opinion to support the entrepreneur with capital and advice. Frequently the entrepreneur believes he just requires the capital but more often than not the advice is equally as important. The correct capital structure, the correct management structure, proper financial controls, introductions, advice, experience and to be a valuable, well-intentioned and up-to-date sounding board.

Rodney Adler

What the entrepreneur believes he needs

Capital

What is more often than not equally important

  • The correct capital structure
  • The correct management structure
  • Proper financial controls
  • Introductions
  • Advice
  • Experience
  • A well-intentioned, up-to-date sounding board

His formula and time horizon

Every venture capitalist has his own formula; for me the management is the number one concern, followed by the industry, followed by the details of the company. A number of venture capitalists like to have a five-year time horizon for the business to mature and then be sold or listed or merged. My experience is that to build a great company requires longer than five years and I do not like to place a time period on what is a most difficult undertaking — that being the establishment and profit creation of an idea into a business.

Rodney Adler

What he looks at, in order

  1. 1Management
  2. 2The industry
  3. 3The company’s details

Time to build a company

Many venture capitalists run a five-year line that ends in a sale, listing or merger. No fixed end beyond five years. 012345678Many venture capitalistssold, listed or mergedRodney Adler
Building a great company takes longer than five years. I do not like to place a time period on it.

Arrange an appointment

Appointments are arranged through the office.

+61 2 8273 8500