January 2, 2013
Most entrepreneurs often have the need to raise cash for business startup or expansion. And this can be accomplished through any one of several sources. One source that helps businesses get needed funds is Venture capital financing.
Venture capitalists look for opportunities to fund businesses that are likely to become lucrative over time. If you are a business owner or you are starting a business and need financial backing, you may consider applying for financing through a venture capitalist. A venture capitalist wants to make money and for them to agree to finance your business you must be able to convince them that their investment in your company will yield significant return within a reasonable period of time. Usually, venture capitalists provide the financing in exchange for profits or ownership of the business.
Before you start approaching venture capitalists, be sure you know your project and business inside out so that you will be able to explain it to venture capitalists if you get quizzed. Having thorough knowledge of your business and been able to explain what makes it better than the competition will certainly help you in convincing the venture capitalists that your business is worth investing in.
When you get a meeting with venture capitalists, they will assess if you have the passion and dedication to make your business profitable and successful. These investors will endeavor to determine if you have the courage and perseverance to reach your goal no matter how rough the road gets.
Venture capitalists want to make sure that your idea is solid enough to yield huge rewards and profits. They would be willing to invest in your business only if they are convinced that they would realize significant returns on their investment. So you should present a solid business plan to convince them that investing in your business is a great idea and will benefit them tremendously. It is important that your business plan describes the steps you plan to implement to make the business highly successful. Presenting an impressive business plan to venture capitalists will greatly improve your chances of obtaining the funding you need.
Even though you can start pitching venture capitalists with your proposal or offer, a better approach is to get personally introduced by other professionals who already have business dealing with the venture capitalists such as executives of companies. Lawyers and accountants also have contacts with venture capitalists and you make contact through these professionals.
Once you have found venture capitalists who want to work with you, it’s time to start negotiating. The idea is to reach an agreeable deal for all parties involved. Venture capitalists want to make money and they will try to take possession of as much control and ownership of your business as possible.
They are in this deal to make as much money as they can and they would try to own a huge share of your company.Just be sure do not give up your ownership rights or control of your business. It is advisable to have your lawyer by your side when you engage in a business negotiation. Your lawyer should be able to guide you in the proper way to negotiate a good deal.