protection, the geographic location, the mechanics of the deal (amount of the raise, valuation etc.), and the opportunity to exit. At Funk Ventures, we look for unique, differentiated, and superior products, services, and technologies. The more value the company can provide to the marketplace, the higher the chances of gaining market acceptance. The company must demonstrate that the marketplace will purchase its product rather than that cf a competitor. The market the company addresses also has to be at least $1 billion in size. Even a very successful portfolio company may only be able to capture a few percentage points of a given market, and a market of less than $1 billion would not enable significant revenues in such a case. The market must also be significantly scalable and show significant growth potential over the coming five to ten years. Such factors largely depend on the industry. Markets with slow or no growth, such as software, may still make excellent investment opportunities because of their enormous size. Companies must also have as much intellectual property protection as possible. If such protection is less obtainable than desired, the company must establish that its product or service is superior to that of its competition, that it can keep competitors from duplicating its tactics, and that the lack of intellectual property protection is not a danger to the company's future. Often, being a first mover in a market can compensate for the lack of intellectual property protection; however, this often holds true for only a few years. The relationship between the key management team and an active investor is invaluable to the portfolio company's success. Therefore, many venture capitalists prefer companies that are relatively local, requiring only one or two hours of plane travel. Particularly in times of adversity, when a venture capitalists expertise and value are most needed, the geographic location of a portfolio company can be quite important. Although most venture capitalists use a standard procedure to make deals, terms can often be vital, particularly in difficult times. Preferred lock, historically the most common means of making venture capital 30