The best place to find venture investment

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/>The Best Place to Find Venture Investment
Inc. 5000 companies are better suited than VCs or angel investors to provide money and the skill
necessary for establishing your start-up.
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There is always a lot of excitement around start-ups. After all, everyone wants to get in on the
ground level of the next Facebook. That's why angel investing is so popular for high net worth
investors, and why venture capital is seen as a sexy career choice.
We read a great article this week by Andy Rachleff, president and CEO of Wealthfront and an
experienced venture and angel investor. Rachleff argues against angel investing and claims that
most venture funds create no value. He cites this now famous Kaufmann Foundation research and
a Cambridge Associates study in saying that, "only about 20 firms or about 3 percent of the
universe of venture capital firms - generate 95 percent of the industry's returns."
This got us thinking. If venture capital and angel investing were largely unsuccessful, who would be
best positioned to build businesses? While individual entrepreneurs can create small businesses
with their own capital, what's the best way to build big businesses, and build them quickly?
We believe the best place for building a big business venture is within the companies that we write
about: Inc. 500|5000 companies. Here's why:
1. These companies are already experienced managers of growth and growth capital, and they
don't have the bureaucratic organizational challenges of larger companies.
2. They are large enough more than 75% of the Inc. 5000 generates more than $5 million in
annual revenue to quickly scale a new business.
3. They have developed unique capabilities and strategic assets in their industries, which can be
leveraged into developing adjacent businesses. They are not mere start-ups with a "good idea."
4. Their core business and growth provides good access to capital, including lower cost debt
funding.
Our sense is that traditional venture funds aren't the right groups to create rapid, sustainable
growth. Most successful venture firms are good at placing bets and managing a portfolio.
Executing a strategic growth path takes a different set of skills, such as building a management
team, identifying strategic opportunities, and delivering on specific key milestones. Growth
companies, especially those in the Inc. 500|5000, are a prime source of these skill sets.

Given that our firm, Avondale, is engaged in partnering with investors and middle market
companies to find new growth engines, we are putting our money where our mouth is on this
topic. Similarly, many of you run growing companies and have sources of growth, in the form of
new business models, within your market segments. We would encourage you to find and invest in
new ventures within your sector and create the next venture success.
Share your thoughts and questions about building a venture within your company with us. We can
be reached at
Read more:
When to Grow and When to Cut
We All Scream for Customer Insights
Simple Way to Create a Scalable Brand
Karl St ark and Bill St ewart are managing directors and co-founders of Avondale, a
strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a
high-growth company itself, and is a two-time Inc. 500 award recipient. @karlstark
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