May 29, 2013
Many people have the dream of starting their own business and achieve financial success. They have a great idea but don’t have the startup capital needed to get things moving. Securing money for your business through the bank loan method can be a daunting endeavor. If you fall into this group and would like to get your business up and running fast, you may need to seek financing through any one of the alternative financing sources.
One source of financing for a business that needs cash is venture capitalist. This financing source means the freedom to obtain the money to put your project into action. A venture capitalist is looking for huge returns by giving entrepreneurs much needed capital. Venture capital financing is high risk for the investor, but it provides the possibility of large profits.
You can get venture capital financing if you know the right way to approach them. Follow the instructions below to increase your chances of getting capital for your business.
Prepare a business plan. Before venture capital firms provide money to a business, they require a business plan that shows the business has an experienced management group and that the business has a high potential to be lucrative. This document is like a road map and explains how a business will be managed, what products or service it will sell and other important details. Most funding sources review the business plan to see how the funds will be used. The typical business plan consists of several sections including the company’s financial goals, a summary of company executives’ experience and marketing strategies.
You can meet venture capitalists by inquiring from other business people you meet whether they can recommend any venture capital firms. Many venture capitalists only invest in specific industries. You can also find a myriad of venture capitalists in your area, as they have meetings very often to discuss investments matters. Your local Chamber of Commerce is a good source of information on where to find venture capitalists. A simple Internet search can also provide valuable information.
Be prepared, however, to answer many questions once you find a potential venture capitalist. They only do this to protect their investment, so you should be prepared to answer any type of questions they may ask. Be sure that any venture capitalists you contact have experience funding companies that are within the same industry as your company.
When you find a venture capitalist that is interested in working with you, they will set up a meeting with you so that you can do the negotiation. Among the things that are negotiated are the terms of ownership and control. Usually these are predetermined before a venture capitalist will conclude the financing.
They often want to share ownership and control of the company, but you shouldn’t let this discourage you from accepting a deal that can make your dream of financial success come true. Venture capitalists can often bring much needed expertise to your company.