Finding the Top 7 Venture Capital Firms


Venture capital firms are often responsible for supporting innovative and groundbreaking new companies. While startup companies are the idea makers and creative thinkers, venture capital firms are often the vehicle by which those ideas make it to the marketplace and become integrated into everyday life.

This relationship is probably why many of the largest venture capital firms are based in Silicon Valley, California, often called the “cradle of innovation.” Many of the largest venture capital firms are currently funding, or have funded, dozens of groundbreaking technology firms, such as Uber, Facebook, Apple, and Skype.

But not everyone understands the complicated terms and dealings of venture capitalist firms. You may be wondering, “What is a venture capital firm?” and “Exactly how do they operate, and what sort of companies do they typically invest in?” This list of venture capital firms is intended to offer a brief breakdown of venture capital firms and what their business typically entails.

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Award Emblem: Top 7 Best Venture Capital Firms in the US

This is not a comprehensive report of how to get venture capital or how to find a venture capitalist but an introductory outline regarding how venture capital works in general. This venture capital companies list is not intended to function as financial advice.

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AdvisoryHQ’s List of the Best 7 Top Venture Capital Firms

List is sorted alphabetically (click any of the names below to go directly to the detailed review section for that advisor):


Venture Capital Defined

A venture capital firm, or “VC,” funds startup companies during the early stages of development, sometimes before the startups are seeing any profits. Generally, a startup will approach a venture capital firm and present a proposal for funding, including an idea, business plan, and timeline for profit.

This list is a complication of some of the biggest venture capital firms in the US and abroad. Keep in mind that actually sitting down for a meeting with one of these companies is extremely difficult.

If the venture capitalist firm sees potential for profit in a particular startup, it may offer funds so that the new company can hire new people, invest in research or otherwise invest in its business so that it may eventually see profits.

A VC will fund a company in exchange for a stake in the business. Different VCs tend to invest differently; for example, some take a larger stake in companies than others. This is because funding a startup is a huge risk – not every technology company becomes the next Uber. Every entity has its own strategy.

Venture capital firms will generally have access to one or several funds that they use to invest in startups, and those funds are private equity funds that come from a variety of sources.

Venture capital firms may also supply a startup with business expertise that it lacks. Often, the startup brings the idea and the creativity, and a venture capital firm may fill in the blanks when it comes to business dealings and experience.

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Funding Stages

Funding may occur over different stages of a startup’s business cycle. Stages of a developing company’s cycle generally include the seed stage, early stage, and later stage. Different VCs may specialize in different stages of funding or may offer all forms in the correct circumstances.

top venture capital firms

Image Source: BigStock

Seed Stage

This is the initial stage of the business. No product is available to market yet, and the business may merely exist as an idea or proposal. Funding at this stage tends to be lower than subsequent stages as costs are still relatively low.

Early Stage

This stage may comprise several sub-stages, but the important aspect of this stage is that the company has moved beyond a mere idea and has set action and processes into motion. Funding during this stage is normally more than seed stage funding because costs have naturally increased.

Later Stage

During the later stage, funding is provided when a product has been placed into the market, though the new company may not yet see profits. The company is still a private company and not publicly traded.


Series Funding

When researching venture capital investments, one may also come across the terms Series A, B or C funding. Similar to seed stage, early stage, and later stage, series A, B, and C refer to the stage of the business that is receiving funds.

Series A

This refers to a stage of development where the startup has begun some movement. Series A funding should help a company launch a product into the marketplace and gain customers or users. Series A may bring the initial seed from an intangible idea to a money-making business.

Series B

Series B moves beyond the first launch to market. Series B funds are generally used to increase users, open up to new markets, and increase profits. For example, sales teams and advertising spots may be funded with Series B funds.

Series C

Series C funding may seek to seriously increase the size of the company. Such funds may be used to buy competitors or to expand to entirely new markets and locations. Series C funds are not limited to venture capital firms and may come from a variety of sources.


Investment Sectors

Most venture capital firms invest in specific industries. For example, some firms are willing to fund health care and technology companies, and other firms focus solely on technology or software-based companies.


Venture Capital Firm vs. Angel Investor

The term “angel investor” often pops up when researching venture capitalist firms. An angel investor also funds startup companies, but they are different than a venture capitalist.

An angel investor is often a family member or friend who, like a venture capitalist, invests in a startup in exchange for a stake in the company. Such investors may also be a business entity but it commonly is a high-net-worth individual in a founder’s network.

The relationship between a founder and angel investor is often much different because the investor has a personal connection to the founder and, thus, is not merely focused on the profit potential and numbers game. For this reason, the terms of such deals are often more favorable for the founder than deals with venture capital firms.

To meet the Securities Exchange Commission’s standards for an accredited investor, an angel investor must have an annual income of at least $200,000 and a net worth of at least $1 million.

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AdvisoryHQ’s Selection Methodology

What methodology does AdvisoryHQ use in selecting and finalizing the firms, services, and products that are ranked on its various top rated lists?

Please click here “AdvisoryHQ’s Ranking Methodologies” for a detailed review of AdvisoryHQ’s selection methodologies for ranking top rated firms, products, and services.


Top Venture Capital Firms

FirmWebsite
Accel Partnershttp://www.accel.com/
Andreessen-Horowitzhttp://a16z.com/
First Round Capitalhttp://firstround.com/
Kleiner Perkins Caufield & Byershttp://www.kpcb.com/
New Enterprise Associates (NEA)http://www.nea.com/
Sequoia Capitalhttps://www.sequoiacap.com/
Union Square Ventureshttps://www.usv.com/

(List is sorted alphabetically)


Detailed Review – 7 Best Venture Capital Firms

Below, please find the detailed review of each firm on our list of best venture capital firms. We have highlighted some of the factors  that allowed these firms to score so high in our selection ranking.



Accel Partners Review


Accel Partners is a venture capital firm founded in 1983 by James R. Swartz and Arthur Patterson. The firm’s headquarters is stationed in Palo Alto, CA, and it has additional offices in London, UK and Bangalore, India.

Key Factors That Enabled This Firm to Rank as a Top Venture Capital Firm

Below are primary reasons we selected Accel Partners to be rated as one of the top venture capital firms.

Investments

Accel Partners funds companies in their foundation stages through later growth phases. Some of the companies that Accel Partners has funded include:

  • Facebook
  • Dropbox
  • #Slack
  • Spotify
  • Venmo
  • Square Space
  • Etsy
  • Braintree
  • GoFundMe
  • Groupon

Accel Partners has funded many social networking companies, such as Facebook and GoFundMe, and states on its website that such networking platforms have the potential to make change and opportunity.

The firm also funds companies involved in enterprise grade tools such as #Slack.

Many, many more names comprise the list of companies that Accel Partners has funded. For a more complete list, check out its webpage here.

Capital

In an interview with Tech Crunch posted on March 15, 2016, Accel Partner’s senior firm member Sameer Ghandi indicated that the firm enjoys making small seed investments of $500,000 to $8 million in seed and Series A deals.

He also indicated that the firm will invest an average of $35  million when funding growth stage entities, but investments may vary from $15 million all the way up to $70 million.



Andreessen Horowitz Review


Andreessen Horowitz is a private venture capital firm working out of Menlo Park, California. The firm was founded in 2009 by Marc Andreessen and Ben Horowitz. This firm has $2.7 billion in assets under management (August 1, 2016).

Key Factors That Enabled This Firm to Rank as a Top Venture Capital Firm

Below are primary reasons we selected Andreessen Horowitz to be rated as one of the best venture capital firms.

Investments

This firm typically makes investments in technology-based companies. Portfolio companies include:

  • 21
  • Airbnb
  • BuzzFeed
  • Facebook
  • Foursquare
  • Groupon
  • Imjur
  • Lyft
  • Oculus
  • Pinterest
  • Skype
  • #Slack
  • Twitter
  • Zulily

The firm has made many more investments. Check out its portfolio page for a full list.

The firm also mentioned some areas of focus in a blog entry posted to its website in 2015. In that blog, entitled “16 Things,” the firm mentioned that it was watching the following markets:

  • Virtual reality
  • Sensorfication of the enterprise
  • Machine learning + big data
  • The full-stack startup
  • Containers
  • Security
  • Online marketplaces
  • Bitcoin and blockchain
  • Cloud-client computing
  • Digital health
  • Online video
  • Crowdfunding
  • Insurance
  • Internet of things (connecting existing technology and appliances to the Internet and optimizing use)
  • DevOps (development operations)
  • “Failure”

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First Round Capital Review


First Round Capital is a venture capital firm that specializes in seed stage funding. The firm was founded in 2004 and operates from San Francisco, California.

Key Factors That Enabled This Firm to Rank as a Top Venture Capital Firm

Below are primary reasons we selected First Round Capital to be rated as one of the best venture capital firms.

Pitch Assist

First Round has set up “Pitch Assist,” a service that offers startups assistance with the pitch proposal presentations. The service helps with design, content, narrative, and more. 

First Round Network

This firm has created First Round Network, an online social network made for company founders and employees to connect. This tool provides startups with a valuable networking and communication resource.

First Round puts on over 80 events per year that also serve as networking opportunities to help get the conversation going.

Expert Network

First Round has also set up an “Expert Network,” where startups may access industry experts for consulting services and advice.

Investments

Some of the startups for which First Round provided seed funding include:

  • Abra
  • Beyond Games
  • Birchbox
  • Blue Apron
  • Chloe + Isabel
  • Good Uncle
  • Mint
  • ModCloth
  • One Kings Lane
  • Refinery29
  • Uber

This is only a sampling of the many, many more startups  that First Round has funded. For a more complete list, check out the First Round webpage.



Kleiner Perkins Caufield & Byers Review


Kleiner Perkins Caufield & Byers is a venture capital firm founded in 1972 and stationed in Menlo Valley, California. The firm also has offices in San Francisco, Shanghai and Beijing.

Key Factors That Enabled This Firm to Rank as a Top Venture Capital Firm

Below are primary reasons we selected Kleiner Perkins Caufield& Byers to be rated as one of the best venture capital firms.

Investments

This company is committed to environmental sustainability. Several recipient companies offer or are developing environmentally conscious products. Some of these companies include:

  • Aquion Energy
  • Beyond Meat
  • Bloomenergy
  • Chargepoint
  • Crossbar
  • Hyla
  • Silver Spring
  • Spruce
  • Englightened
  • UShip

This firm also works with companies in industries like consumer and enterprise digital, IoT connected devices, and life sciences and digital health. Some of those companies include:

  • Airbnb
  • Nest
  • Shazam
  • Spotify
  • Snapchat
  • Soundcloud

Capital

According to Bloomberg.com, Kleiner Perkins commonly makes investments in companies in the following stages: seed, early stage, growth capital, expansion capital, and later stage.

Typical seed investments may range from $100,000 to $1 million, early-stage investments range from $1 million to $10 million, and growth stage  investments range from $10 million to $ 75 million.



New Enterprise Associates Review


New Enterprise Associates is a venture capital firm with offices in Menlo Park, California and Washington, D.C. as well as in New York, Chicago, China, and India.

Key Factors That Enabled This Firm to Rank as a Top Venture Capital Firm

Below are primary reasons we selected New Enterprise Associates to be rated as one of the best venture capital firms.

Firm History

The firm was founded in 1977 by C. Richard Kramlich, Chuck Newhall, Frank Bonsal, Mark Perry, and John Nehra. Its initial investment fund was a mere $16 million, but the firm now has 15 funds that total $17 billion in committed capital. In fact, New Enterprise is the world’s largest venture capital firm.

Investment Areas

Its investments focus on technology and health care sectors. Technology investments involve software and services, systems, consumer and Internet, and energy. Some funded companies in the technology sector include:

  • BranchMetrics
  • Cloud Flare
  • Glam Squad
  • Green Chef
  • Luminate
  • Mule Soft
  • Pocket
  • Wallapop

For a more extensive list, check out New Enterprise Associates’ technology portfolio page.

Health care investments involve biopharma, devices, and services. Some funded companies include:

  • Aciex
  • Adaptimmune
  • Alimera Sciences
  • Amerigroup Corporation
  • NeoTract
  • Nexchem
  • Nova Medical Centers
  • Nuelle
  • Proxima Therapeutics
  • Pyxis
  • Ra Pharmaceuticals
  • Radiology Partners

And many, many more. For a  more complete list of health care investments, check out New Enterprise Associates’ health care portfolio.

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Sequoia Capital Review


Sequoia Capital is a well-known venture capital firm in Menlo Park, California. The firm was founded in 1972 by Donald Valentine. Investments primarily focus on startups in the energy, financial, enterprise, health care, Internet, and mobile sectors.

Sequoia Capital - largest venture capital firms

Image source: Big Stock

Key Factors That Enabled This Firm to Rank as a Top Venture Capital Firm

Below are primary reasons we selected Sequoia Capital to be rated as one of the top venture capital firms.

Sequoia Capital funds companies in the seed stage, early stage, and later stages.

The collective public market value of all of the companies that were, at some point in their development, funded by Sequoia Capital, has reached a value of over $1.4 trillion.

Some of the companies it has funded include:

  • Apple
  • Atari
  • Cisco
  • Comprehend
  • Decolar
  • Game Fly
  • Google
  • Instagram
  • LinkedIn
  • PayPal
  • Reddit
  • Kayak
  • Kiwi
  • POPSUGAR
  • Stella and Dot
  • Tumblr
  • YouTube
  • Yahoo
  • Weebly
  • Yik Yak
  • Zappos

The portfolio consists of many more companies. Check out a more complete list here.

Capital

According to Bloomberg.com, Sequoia commonly makes seed and early stage investments with US companies. Its growth stage funding activities are not limited to the US; seed stage investments range from $100,000 to $1 million, early stage between $1 million to $10 million, and growth stage between $10 million and $100 million.

The same Bloomberg profile also indicated that Sequoia Capital strives to be the initial partner when making growth stage investments.  Also noted was that Sequoia Capital typically invests as a minority partner with funded companies.


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Union Square Ventures Review


Union Square Ventures was founded in 2003 and is headquartered in New York City, New York. The firm manages $1 billion over several funds. It states on its website that it strives to invest in companies with the ability to “fundamentally transform” important markets.

Key Factors That Enabled This Firm to Rank as a Top Venture Capital Firm

Below are primary reasons we selected Union Square Ventures to be rated as one of the best venture capital firms.

Investments

Union Square Ventures invests in networks, infrastructure for a new economy, and open, decentralized data enablers. Some of the companies that Union Square has funded include:

  • Kickstarter
  • Foursquare
  • Meetup
  • SoundCloud
  • Kik
  • Reality Shares
  • Quizlet

For a more complete list of investments made by Union Square, check out its portfolio. There, it has also noted what series funding each company received from Union Square.

Capital

The firm manages $1 billion in capital. According to Bloomberg.com, Union Square tends to make initial investments of $1 million but may increase funding in later stages of portfolio company development and can reach up to $20 million. Partnership stake is normally around 15–20%.


Conclusion – 7 Best Venture Capital Firms

Venture capital firms are an important piece of the economy. These firms are often the fuel that drive innovative ideas through to a tangible result. We’ve all heard the old story about how successful companies started in the founder’s garage, but how did those companies get from inside one tiny garage and out to the marketplace?

Oftentimes, those companies were funded by a venture capitalist firm that provided necessary capital and to get the idea off of the ground. Commonly, venture capitalist firms supply necessary guidance and networking in addition to monetary assistance.

Not everyone can access funds through family or other means. If funds cannot be found in a person’s own network, a venture capitalist firm may be a viable option if it believes in the profitability of the potential business.

Hopefully, this list of venture capital firms has shed some light onto the question, “What is a venture capital firm?” If you are interested in proposing your business idea to a venture capitalist, be sure to do some further research regarding all of the materials you should have ready before approaching or meeting with one.



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