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Venture Capitalism vs. Sponsorship

by Emily Taylor
  
6 07 2010

So, I’ve been on a large number of calls recently consulting with individuals seeking sponsorship.  Usually before I dig into what SponsorPark can do for them to complement their efforts in connecting to sponsors, I like to hear a brief overview of what their sponsorship opportunity consists of, for several reasons – to make our conversation more efficient by ensuring I’m consulting with the most appropriate perspective, to address any issues they might be facing, and to ensure we truly are a good fit for their efforts.  I truly think my job is thoroughly intriguing as I get to hear story after story of passionate efforts of people working very hard to make a difference in a hundred different unique ways… I love it.  I have come across a surprising number of conversations with individuals who have confused venture capitalism with sponsorship.  That being the case, I thought it would be a good idea to clarify the difference.

Sponsorship is the description of a type of partnership.  A sponsor either provides financial support or in-kind support to a property or individual who has some kind of asset or benefit to offer in exchange.   The kind of sponsorship that we support on SponsorPark is considered to be a marketing investment for a sponsor.  It is not a donation out of the good of their hearts, it is not simply a tax right off, and it is not simply to keep the property alive – as tremendous as that organization’s efforts might be.  It is a mutually beneficial relationship established for the growth of both parties, and addresses the unique nature of each individuals needs in a way that complements and develops each party.  These sponsors are going to benefit their company in some way, whether it offers further brand recognition, or drives sales; ultimately it builds their bottom line.

The definition for Venture Capital (according to Wikipedia): “is a type of private equity capital typically provided for early-stage, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company.”  I’ve mentioned before, the television show: The Shark Tank.  This is a perfect example of a venture capitalist effort.  These investors are going to benefit personally in some way, whether it be revenue sharing or decision making authority; and they have vested interest in providing the resources to make the new business or product successful. 

There are ways that the two efforts are similar, there’s definitely a give and take effort in place, and benefits should result for active parties; incentive behind the investment and the ultimate gain is very different.

 

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