Most small companies will eventually need (or already do need) capital to start and grow. In many cases, tapping savings – your own, or that of interested family and friends – is the first step in obtaining the necessary funds.
But, if you are in need of additional capital, one option for some small companies is to seek venture capital, or VC. Before you run headstrong into the VC world, though, it is essential to know just exactly what you’re looking for, as well as what you are willing to give up in order to get the needed funding.
Some of the key tips to keep in mind when going the route of raising venture capital include:
- Having a good understanding of the venture capital process. First and foremost, it is important to understand just exactly how the process of securing venture capital works. One of the biggest reasons for this is because it can be quite different than getting a loan from an investor or a lender. For example, venture capitalists will typically want an equity stake in your business, and in some cases, they may also take an active role in the company. So, unless you are willing to give up sole control of your company, venture capital may not always be the best path.
- Making sure that the venture capitalist has a focus on your industry. If you’ve decided to move forward with VC funding, then be sure that the venture capitalist has a focus in your particular industry. This can help you to better align how you will work together going forward. It can also help to avoid various issues down the road.
- Submit a clear, detailed business plan. When making a determination as to whether or not they want to invest in your firm, venture capitalists will need to know that they are making a good investment – and one of the best ways to show them that your business can benefit them is to provide them with a clear and detailed business plan.
- Consider the venture capitalist(s) as members of your company’s team. Because many venture capitalists will take an active role in your company’s operation, it can be helpful to consider them as members of your company’s team, as versus solely a source of funding.
Closing the Deal for Venture Capital
When researching potential venture capitalists for your funding, it can also be beneficial to interview several possible VCs before you make your ultimate decision. Although there may be several good options for getting capital, it is advantageous to be sure that you choose one that you will enjoy working with – as they may be one of your partners for years to come.
For more tips on how to get the new business capital that you need, <Join the Startup Forums>. It’s free to become a part of the Startup Forums, but the tips from other entrepreneurs can be priceless.