Business

How Companies Like Twitter And Facebook Get So Rich

The courtship of startups by venture capital firms is the greatest love story of our time.

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First, Grumpy Cat Ventures has to do copious amounts of research to learn Cat.ly's story. If it's a hot company and it's a later round of funding, GCV will compete with a number of other VC firms looking to invest in the company.

Thus begins the five- to seven-year process of growing Cat.ly and grooming it for its public markets debut or a large buyer — anything to grow the business and make all parties involved money.

Grumpy Cat Ventures is also likely on the lookout for startups that have people who will likely go on to future startups and, in turn, be more lucrative investment options for the venture capitalists who've worked with them in the past.

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"The single most powerful thing you have in terms of that courtship process, and frankly as a way of building rapport, is when employees of your existing portfolio go on to do something interesting," said Matthew Harris, managing director of Bain Capital Ventures, adding that the strartup world is ripe with serial entrepreneurs looking for the next big thing. "They know you and come back to you."

And in the end, with patience, chemistry, and aligned ideas, Grumpy Cat Ventures and Cat.ly could form a match made in entrepreneur heaven...netting both sides a great deal of money with a successful IPO or a big name buyer.

Mariah Summers is a business reporter for BuzzFeed News and is based in New York. Summers reports on hospitality, travel and real estate.

Contact Mariah Summers at mariah.summers@buzzfeed.com.

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