Understanding the venture capitalist
Before investing a lot of time and money into securing a venture capitalist, make sure that you truly understand what today’s VC really is.
A lot of small business owners think of venture capitalists as deep-pocketed business high rollers that are scanning the horizon for start-ups in which to invest their money.
In reality, VCs prefer three-to-five-year old companies with the potential to become major regional or national entities. They want to see a small company become large, and in the process, collect higher than normal returns on their stock. The startup with no history of income, or any kind of history for that matter, has little chance of attracting a legitimate venture capitalist unless they happen to be a close friend or family member.
Another key factor to consider is that venture capitalists are extremely picky. They might peruse hundreds of potential investments, but only engage with a handful of them. Usually, the VC will stick it out until he/she can find a company that has the possibility of going public. The possibility of a public stock offering is critical to venture capitalists. Management structure, industry competition, innovation, and the potential for industry growth in general are also key factors.
Typically, a VC will want to have little influence on the day to day operation of a business he/she invests in, but if times get tough he may attempt to exert some control on the direction of the company. So the small business owner that likes to be in total control may have a bit of trouble dealing with a venture capitalist if the waters turn turbulent.
Make sure that you consider these points carefully before you spend your two most valuable assets on trying to secure some VC money. Time and money are a terrible thing to waste for the small business owner.
Please visit us again for more small business finance advice
A lot of small business owners think of venture capitalists as deep-pocketed business high rollers that are scanning the horizon for start-ups in which to invest their money.
In reality, VCs prefer three-to-five-year old companies with the potential to become major regional or national entities. They want to see a small company become large, and in the process, collect higher than normal returns on their stock. The startup with no history of income, or any kind of history for that matter, has little chance of attracting a legitimate venture capitalist unless they happen to be a close friend or family member.
Another key factor to consider is that venture capitalists are extremely picky. They might peruse hundreds of potential investments, but only engage with a handful of them. Usually, the VC will stick it out until he/she can find a company that has the possibility of going public. The possibility of a public stock offering is critical to venture capitalists. Management structure, industry competition, innovation, and the potential for industry growth in general are also key factors.
Typically, a VC will want to have little influence on the day to day operation of a business he/she invests in, but if times get tough he may attempt to exert some control on the direction of the company. So the small business owner that likes to be in total control may have a bit of trouble dealing with a venture capitalist if the waters turn turbulent.
Make sure that you consider these points carefully before you spend your two most valuable assets on trying to secure some VC money. Time and money are a terrible thing to waste for the small business owner.
Please visit us again for more small business finance advice
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