Who Are Venture Capitalists?
Venture Capitalists are wealthy private investors who can help finance your business either it being a business in trouble financially or a new business venture. 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.
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