We can easily see that it does not matter how the money is raised; there must be a fair exchange for the team, for the technology, and for the money.
The real goal of corporate finance is to see that the company has more than enough money to achieve its goals.
Now that we say it, we know it could not be anything else. What else could it be?
In seeing this, we know immediately what venture capital is not.
Real venture capital does not deprive the company of funds so it can be bought for a song later on, taking the work of the team for little or nothing.
Venture capital is not loading the entrepreneurial team down with straightjacket agreements.
Venture capital is not setting a cheap value on the company so you can make a huge gain out of a share of the company that should belong to the people that daily contribute their sweat.
True capital would not keep control of the company to wrest control from those executives who know best how to manage. Capital is not there to know better than management. Management, not capital, is on the firing line and best knows how to achieve the goals of the company.
True corporate finance is seeing that the company has more money than it needs. True venture capital motivates and encourages the team. True venture capital values the team and acts accordingly. True venture capital is part of the team.
True venture capital is more than capital. It is a partnership of equals; it is support that is more than financial; It is on the tam that shoulders the burdens and fights the fights.
Only true venture capital is entitled to share in the rewards of the team.
When a company is adequately financed, the entrepreneurs and their team are not deprived of enough pay to support themselves and their families. They are well rewarded for their work by industry standards. They are not paid little or nothing so the investors can live high.
A company only has enough money when it has enough money to meet the unknown.
A company with good finance can afford those things it needs to win in the combat of business.
Real finance gives these things to the company.
The real goal of any venture capital is to see that the company has more than enough money to achieve its goals.
Michael
Use an intermediary. The benefits of using one have been discussed throughout this program. Hopefully you will use Northern Crown Capital, but if not there are many good ones out there.
Remember that in most cases, the deal you end up with is not the deal you thought you would get when you started. You have to be flexible and able to turn on a dime in order to make the deal progress.
Matthew
Deal with people of quality. Associate yourself with experienced people who have gone through several cycles and have a proven track record in a wide variety of industries.
Do not be greedy. In the market the bears can make money, the bulls can make money but pigs go to slaughter. If you are too greedy, you cannot make a deal. Markets will change. Windows open and windows close. To some extent investing is a fashion business. Certain types of deals are in fashion and then they are out. When money is being made available you are better off to take it when it is being offered.
Always be very open and candid in your discussions. Do not hide. Do not play games. Be totally open. And whatever you do, do not bluff. An investor will find out quickly when you are bluffing and you will lose the deal.
Bob
Financing is just one f the tools you need to build a good company. It is like the blood in your body. Financing is not the heart and soul – your business is.
Good entrepreneurs build great companies because they are good at motivating their employees, excellent at working with suppliers, have an obvious ability to satisfy customers and they also treat the venture capitalist as a supplier, albeit a supplier of money and not a physical product. If you think of investors with a “me against them" attitude or with any degree of hostility you should not enter into the deal. You will need their support when times get tough. A good working relationship with investors will help ensure your long term success.
Both John Lux & Evan Carmichael are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
John Lux has sinced written about articles on various topics from Home Management, Debt Consolidation and Venture Capital. John Lux, the author has been a trader, market maker, investment banker, investor, underwriter, corporate attorney, and entrepreneur. You can learn more at his website =>>