Venture Capital for Dummies
Venture Capital is a big amount of money, acting as a rocket fuel and shooting your company above to the stars.You dream of making it big? Your hopes start where the hopes of others end?Then our article about Venture Capital may be just right for you!
What Is Venture Capital?
To start your company you may acquire some money from an Angel Investor. To get your product to the testing stage and out to the market you may need a help from angel investors’ funds. But in order to make it big, you will need a help from a Venture Capitalist.Those people invest only in the companies they deem to have a great potential for a big return on investment, so your future may be bright if you manage to attract them. Not only you will get the money, but also an affirmation that your business is doing well!They can invest from 25 million dollars to a billion in your company helping you to finish up your product or to expand.What will a venture capitalist want in return? Your equity. Much of the money your company will earn after accepting the help will go to the Venture Capitalist’s pockets. When deciding on taking the cash from those investors it is very important to consider if your share of profits after growing your company will be bigger than the amount you would earn without their investments.
The good thing is that the money they will give you at the start of your business relationship is intended for investments only and you don’t need to return it. The money is all yours to improve your company and make it the most profitable you possibly can.
You must also take into the consideration that the venture capitalist will demand to have a say in how you will manage your company. You may find yourself in a situation where you can’t sell it without their approval. It is vital that before signing a contract you consider the long-term consequences of partially losing your freedom.Are you sure that in the future you won’t regret that you can’t make certain decisions for business on your own?Are there circumstances in which giving the control to the investors would be detrimental to the company?These are tough calls to make, sometimes given the unsure nature of the future, it’s impossible to make them and be wholeheartedly certain they were right.Don’t forget that some venture capitalists may have more experience in your field, especially if you get a right one for you, so their choices may in some cases be better and more information based than yours.But you are the boss and you have to decide, knowing that you are taking you and your company on the whole different patch each time you make an important choice.