Venture Capital is a big amount of money, acting as a rocket fuel and shooting your company above to the stars.
You dream of making it big?
Your hopes start where the hopes of others end?
Then our article about Venture Capital may be just right for you!
What is venture capital?
To start your company you may acquire some money from an Angel Investor. To get your product to the testing stage and out to the market you may need a help from angel investors’ funds. But in order to make it big, you will need a help from a Venture capitalist.
Those people invest only in the companies they deem to have a great potential for a big return on investment, so your future may be bright if you manage to attract them. Not only you will get the money, but also an affirmation that your business is doing well!
They can invest from 25 million dollars to a billion in your company helping you to finish up your product or to expand.
What will a venture capitalist want in return? Your equity. Much of the money your company will earn after accepting the help will go to the Venture Capitalist’s pockets. When deciding on taking the cash from those investors it is very important to consider if your share of profits after growing your company will be bigger than the amount you would earn without their investments.
The good thing is that the money they will give you at the start of your business relationship is intended for investments only and you don’t need to return it. The money is all yours to improve your company and make it the most profitable you possibly can.
You must also take into consideration that the venture capitalist will demand to have a say in how you will manage your company. You may find yourself in a situation where you can’t sell it without their approval. It is vital that before signing a contract you consider the long-term consequences of partially losing your freedom.
Are you sure that in the future you won’t regret that you can’t make certain decisions for business on your own? Are there circumstances in which giving control to the investors would be detrimental to the company?
These are tough calls to make, sometimes given the unsure nature of the future, it’s impossible to make them and be wholeheartedly certain they were right.
Don’t forget that some venture capitalists may have more experience in your field, especially if you get a right one for you, so their choices may in some cases be better and more information based than yours.
But you are the boss and you have to decide, knowing that you are taking you and your company on a whole different path each time you make an important choice.
How to attract venture capital?
You need to possess a solid foundation in your business having a believable perspective to turn out very profitable to attract those investors. But what can you do in order to help your chances just a little?
Moving to Silicon Valley may be a good choice, many startup investors live there and being close to them will make communication between both parties much easier and more comfortable. Sometimes it may tip the scale a little in your favor and influence the decision of investors to meet up with you in the person.
Have a strong team
Show that no matter what storm may lie ahead your team will brace itself and prevail in the end. You will prove that way that you have a rock solid human foundation and your company is up to the task.
Go to conferences and get to know other entrepreneurs
Apart from business connections, it will teach you to speak the same language as other business- oriented people. You may also find someone who was in your position before and will share some quality advice with you.
Understand the market
Venture capitalists’ preferences change over time. You need to understand what is currently deemed profitable in your industry. You should understand what people are talking about right now and what makes them excited.
This will change the way you converse with them and help you find common ground. You will also know what not to say, which sometimes is equally important.
Don’t spam investors
Do you read the hundreds of unwanted emails you get each week? I am pretty sure that investors don’t do it either. The best course of action would be to make a list of a few investors most likely to fund your project and find somebody who would introduce you to them.
This is one of the reasons the above advice to get to know the people in the business is so important.
Know what is happening outside your specialty
Getting a broader view of things which are happening can give you some great ideas and inspirations. It also gives you topics to converse about when you are making your business connections.
Don’t forget that if you pitch does not work, you can change it. You can change it many times if you need to. Let the feedback from investors who rejected your ideas influence the way you will try to sell them next time.
How can I end my article more appropriately than to recommend a great book I read on the subject which deepened my understanding of Venture Capital.
Here it is:
The list of all investors in Europe (not only VCs)
Here are two lists of potential Venture capitalists and other investors who may help finance your company. Check them carefully and try to find the one which may be right for your type of business.