Raising venture capital (VC) can be a challenging task. The first part of this process is locating the right firm. While this may seem simple, it isn’t. There are thousands of VC firms in the United States alone, and wasting time pursuing the wrong VC is one of the most common reasons why companies fail to raise the capital they need.

When seeking a venture capital firm, you should consider their location, industry preference, stage preference, partners, portfolio and assets.

• Location: For the most part, VC firms only invest within a few hours’ drive of their offices. In doing so, the firms are able to more actively get involved with, and add value to, their portfolio companies.

• Sector preference: Many firms specialize in specific industries such as healthcare, IT, transportation, etc. While you may have a great idea and business plan, if you fall outside of the VC’s sector preference, you’ll be wasting their time and yours.

• Stage preference: Some VCs invest in early stage startups where the rewards match the inherent risk of investment. Other firms prefer to provide “mezzanine” type financing that will bridge the gap between earlier rounds and a larger event, such as an IPO or a merger.

• Partners: Most VC firms consist of a group of partners. When they make an investment in your firm, they typically have a partner take a seat on your Board of Directors. Making sure that firm has a partner with experience and knowledge of your industry in critical. If they don’t have the personnel with knowledge of your field, they will likely pass on the opportunity.

• Portfolio: VCs often have a sizeable portfolio of companies that they have made investments in. How would your firm fit into this portfolio? Are there any synergies that might exist between your Company and those of others in the portfolio? If so, your odds have greatly improved!

• Assets: Most investments will take place in stages. You will receive an early round of funding, and once you have met targets, you will receive subsequent rounds to help you grow. Make sure your VC has the means to grow with you as you grow so that you can receive additional investments as needed.

Finding the right VC firm is absolutely critical to companies seeking funding. Success results in the capital required and significant assistance in growing your venture. This is a time consuming process, so make sure you do your research, and that you don't waste time spinning your wheels with VCs who aren’t a good match for your business.