How to Get Noticed by Venture Capital

This story was originally published June 2, 2011.

CHICAGO ( MainStreet) -- The market for technology start-ups is vast and growing, but it doesn't take pages and pages of business projections or even an off-the-charts innovative idea to get a venture capital firm on board.

Lightbank is a Chicago-based firm focused on early-stage technology companies. Its founders, Eric Lefkovsky and Brad Keywell, were the brains behind the daily deal Web site Groupon ( GRPN).

Lightbank looks to invest primarily in early-stage technology companies. But the firm also serves as mentor, taking a hands-on role to help promising entrepreneurs grow their businesses.

Paul Lee, a partner at Lightbank, spoke with us about the companies the firm is eyeing and how small tech firms can get noticed.

What are some specific technology areas with a lot of startup activity right now?

Lee: One is what I'd like to call customer acquisition. That really is like a Groupon. The beauty about Groupon is it's the ultimate performance marketing -- you're only really paying for customers that are literally walking through your door. The flip side is the loyalty aspect. Of your existing customers, how do you get them to come back? We've actually been looking at that space.

On the customer acquisition side, we announced in June an investment in a company called OpenChime -- a consumer can get bids on any service you're looking for. I used the service to get quotes on roof repair. For those companies it's a great source for new leads.

The other aspect of performance marketing is that small businesses don't really have time to manage their social media tools. What they want is to manage them in-house, but not hire expensive consultants to do that. We invested in Sprout Social, which will manage their brand online.

What characteristics does Lightbank look for in an investment?

Lee: Right off the bat, a passionate and intelligent management team. You'd be amazed at the number of companies we pass on because we're not as bullish on management. Also, is the sector they are attacking really a large market? At times, business owners' original theses are flat-out wrong, and so what needs to happen is that the business needs to pivot into something that does work.

At the end of the day, we're betting on the management teams. We're really looking for a track record of excellence in whatever they've done.

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