There is usually a five year lock up on Venture Capital investments, this means the Venture Capitalist or the business they are helping to fund cannot get out of the deal until the five years is up, sometimes this may be longer depending on the agreed business plan. They also charge management fees and incentive fees as well as taking a good sized share of your business. Unlike Business Angels, Venture Capitalists like to have a director or management role within the company to discuss the running of the business as well as keeping a close eye on their investment making sure the business succeeds. But there are a few Venture Capitalists who like to give the company the finance they require then take a back seat and let the company who know the trade etc. and let them run the business on a day to day basis.
Finding the right Venture Capitalist for you may be a scary prospect but there many Venture Capitalist firms now available which have Venture Capitalists waiting to invest in a new and upcoming business with good prospects. Making a proposition to a Venture Capitalist can be a scary thought, you need to remember they will want to know exactly what your plans are for coming years, the market you will be promoting your product, service in as well who your target audience are for this as well as how much it will cost to make if necessary and the cost you will sell it for, showing the profit you will make on each product, item or service. One thing to remember is that Venture Capitalists don't care about the dreams you have about this venture, all they want is a good return on their investment in your business.
Before going to see a possible Venture Capitalist the best thing to do is to get advice from other business people in the same area you want to go into to get their advice on your product and or service and their honest opinion of the idea.
You will need a well detailed business plan when you meet up with the Venture Capitalist and if you are turned away by them don't give up keep trying, if show people you're serious about your venture and wont fall at the first hurdle your more likely to win people over with their own weaknesses.
Some points to consider are:
? Put all your thoughts on your new venture on paper, brainstorm everything
? Research your proposed market or industry
? Get someone to argue against you to see if you have a water tight solution
? If you have little knowledge on a certain area ask for help from people who know
? Create a budget, showing every detail you can think of
? Read thoroughly your business plan to ensure there's no errors
? Know who your competitors are
? Present yourself well ? the more presentable you are the more likely you are to be respected by the Venture Capitalist make a good impression
? Make sure you know your speech, your business plan back to front so you come across confident as you only have one chance
Thinking of a start-up? Time was, a two minute elevator speech to the right investment banker or venture capitalist got a financial fire lit under your brilliant idea. Seminars were devoted to the art of pitching short-form visions to short-term visionaries. That was then: Money flowed, risks were riskier. VCs were easy, full of heady exuberance. Markets were flush with cash and. . . well. . . more cash. Ideas were funded too far ahead of execution, and it was okay that a lot of idea-mongers fell flat on their faces, got executed. The market forgave failure. There was always another Google or Cisco around the corner. Investors jumped in and out fast. Ideas were king. Falling on one's face was, after all, to be expected when aggressively innovating. But that was then. These days, expectations are a tad more demanding, at least from the investment houses that are still in business. It isn't as if there isn't any cash - there is. But investors are long past the thrill of one night stands or starting companies on their own. What they're looking for these days is reliability and commitment. Quality trumps quantity as big money targets fewer opportunities, but sticks with them longer. If you expect to get hitched, you'd better have a track record, more than a story, and mostly, a company already in business. So, after you've begged, borrowed and stolen enough to get your company going, to get your horse out of the gate, where do you go from there? Reliability means executing a business plan with meat on its bones, a credible plan with vision, accurate numbers, and down-to-earth assumptions. Investors will make you prove you can execute to your plan, too, even if you're just starting out. They'll demand evidence you practice what you preach before throwing initial funding your way. Then, in order to lock up continued funding, you'll be on the hook to show an expanding customer base, market leadership, increased sales and margin. Credibility means realistically planning your growth. If you can't do that, you'll never grow. Credibility also hinges on long-term planning for expansion. Investors expect growth, right? What is your plan to evolve the backbone of your business? - Financial, Quality, CRM, Marketing, Distribution, Production systems? How are these functions accommodated when you're small? Five years from now? What milestones cause you to add people/cost? What market conditions fund those milestones? Where are plateaus in your opportunity from which to launch vertical markets, international expansion? Investors have matured, how will you? Having a great idea is just the start. Companies like Thomas Financial Services, LLC, www.thomasfinancialsvcs.com step in where you can't, partnering with you to build competencies, tune you up for investment, plan your success, tell your story. Likewise, such experienced companies, knowing what investors are looking for, often act as third-party scouts, digging deep, offering quick-turnaround, neutral analysis of investment targets in over sixty categories. Great concepts fall flat in the hands of losers. Weak concepts usually thrive with a winning team. Proving you're capable of sustained, incremental, planned success is your single greatest keystone to credibility. Growth has slowed today. Investment is tough. Make investors believe in you. Getting help by partnering with a winner in harsh economic conditions may be the best investment you make.
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Jene Pedder has sinced written about articles on various topics from Hair Styles, Legal Matters and Finances. Jene Pedder is the Webmaster of Angelstartups who specialize in helping you find a suitable