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What Do Entrepreneurs Pay for Venture Capital Affiliation?

Knowledge @ Wharton's article says:

In the minds of entrepreneurs working to grow their fledgling technology companies, the intangibles brought to the table by their investors – experience and contacts – often are worth a lot more than money itself.

If a company borrows from a bank and the terms are similar, it does not matter what bank it gets the money from. In seeking venture capital investment, however, a company is hungry not just for cash but also for the venture firm’s “reputation and access to a network of relationships – with customers, suppliers, investments bankers and other important constituents in the universe that the entrepreneur cares about,” Hsu says.

What makes VCs reputable? Experience, Hsu says. “As a venture capitalist gains more investment experience in a particular industrial sector, he or she is more likely to gain the expertise needed to help startups in their portfolio acquire resources for successful development, which is a powerful contributor to VC reputation,” he writes in his article. “Each additional investment extends the VC’s information network, either acquiring important social contacts and/or gaining experience in effectively structuring deals or monitoring entrepreneurs in the industrial sector.”

No brainer concept, but useful information.