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March 6, 2013

How To Raise Venture Capital Funds For Business Startup Or Expansion

Many entrepreneurs are faced with the challenging task of obtaining cash for business startup or expansion. Venture capital financing is a great way to raise needed funding for your project. The first part of this process is locating the right venture capitalist. This is not a simple task. There are thousands of venture capitalists in the United States alone, and chasing after the wrong ones is one of the reasons why business owners fail to obtain the capital they need.

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Many venture capitalists focus on specific sectors such as wireless technologies, information technology (IT), healthcare, etc. Some venture capital firms have their sector preference, and if you fall outside of their sector preference, they will pass on the opportunity.

Finding the right venture capitalist is absolutely critical to businesses seeking venture capital. If you succeed in finding the right firm, you will obtain the capital you need to start and grow your venture.

Finding venture capitalists can be a difficult task if you don’t know where to find them. However, once you know where to find these investors, the hard work will certainly be worth it. Here are some ways for you to find venture capitalists:

Some companies that have business dealings with venture capitalists are a good place to start. Going through executives of these companies are a great way to contact venture capitalists. Professionals like accountants and lawyers usually have access to venture capitalists and getting introduced by such a professional is a good step to contact prospective venture capitalists.

You cannot just contact a venture capitalist and toss any idea to them hoping that they will give you the financial backing you need. There are proven strategies you must follow in order to get the attention and cooperation of the venture capitalists.

Before you start looking for venture capitalists to pitch, it’s important that you have a solid business plan. You want to convince them that their investment in your company will bring back huge returns. Investors are only interested in infusing their money in a company that has the potential to bring back significant returns. Be passionate about your idea or project and present your business plan in such a way as to convince them that your business provides great value both for customers and investors. If you can show them that you have a viable opportunity and that your business will become highly lucrative over time they will certainly give you the financial backing you need.

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When you are ready to negotiate with a venture capital firm, be sure to get proper legal advise. Do not try to go about this process alone. It is not a good idea to negotiate a business deal without consulting with a knowledgeable and experienced lawyer. You need a lawyer who is proficient in business negotiations, particularly when it comes to venture capital financing contracts. Venture capitalist firms often want to realize a huge return on their investment as well as get involved in the management of the company they invest in. You want to make sure that you retain ownership rights and have full control of the direction of your company. The venture capitalists can be on the mangement team and advisory board but you still want to be the company owner. Have a good lawyer on your side throughout the negotiation process for best results.

Peter

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