How To Get Venture Capital
How to get venture capital may be on the minds of most companies large and small when times are good and bad. But the concern and question is also on the minds of entrepreneurs wanting to test their wings and fly out of the safe and secure world of a regular payroll job. For the big business concerns, they have their own sources for funding called venture capital firms that can be found online. These VC firms usually pool the money of a number of investors with whom they have a good working relationship. The VC firm will often invest in companies that have yet to go public, and then hope that when they do the value of the business will dramatically rise. A number of VC firms suffered mightily in the late nineties when many dot com companies went belly-up.
In many cases, the companies in which the VC firms invest are very small, but have tremendous growth potential. These companies are very limited in their financial footprint and the only way they will succeed is with the infusion of VC money from an outside source. In many cases, these companies that use the large moneyed VC firms are bio-tech companies, or some new radical form of computer design or other technology driven enterprise. Sometimes the firms go after the companies initially, and sometimes the companies seek out the VC firms first asking how to get venture capital. In times past and even now, large chunks of VC funding comes from ultra wealthy individuals, but also from pension funds and other traditional sources looking for investment opportunity. So how to get venture capital can first be answered by having something radically cool and innovative that no one else as thought of or has been able to do and it can't be an invention for inflatable clothes hangers or some such drivel.
But in these cases we are talking about millions of dollars and that leaves out most small business owners and entrepreneurs that need money to fund their dreams and still need to know how to get venture capital. Whether it is fifty million for some ultra radical medicine being created or ten thousand dollars for that dog washing franchise, the needs are the same and pressing for various entrepreneurs. And the ten thousand may be small potatoes, but the woman wanting this business to get off the ground does have some places to go first. Sometimes the old standbys work for the small business owner. Money saved, IRA money (but watch for the early withdrawal and tax liabilities), and putting one's house equity up as collateral are answers for some who have been able to save. In some cases, a long held whole life, universal or convertible term insurance policy can be borrowed against a business loan. These are starting points in the battle of how to get venture capital.
In some small business enterprises, the owner keeps a day job and just keeps pouring extra money into the dream until it becomes self-sufficient but let's explore some other ways of how to get venture capital, the money one needs to the get the business going. To begin, one of the best sources for entrepreneurs is the Small Business Administration. This federal program can offer mentoring from successful business people and can answer many questions regarding the procurement of seed money but sometimes they can't answer every question so consider going to one's personal bank if that SBA encounter is unsatisfactory. But from here on the answer to how to get venture capital may rest on one's credit score and history. Do not walk into a bank, even with a very good credit score unless you have an exciting and compelling business plan that has been thoroughly crafted with the help of a real business expert; the SBA mentor can certainly help with that. Knowing the power of God's ability to help us in our work, along with the very fleeting nature of life helps Christians stay focused on the important stuff. "So teach us to number our days that we may apply our hearts to wisdom and the let the beauty of the Lord God be upon us; and establish thou the work of our hands upon us..." (Psalm 90:12;17)
A small business loan, which is the name of a certain kind of lending agreement apart from bank loans is offered by a number of lenders and then guaranteed by the federal government. So if the bank and SBA thing don't work then how to get venture capital is still an issue and one source not usually thought of is a hard money lender who is usually someone living near the geographic location of the business, say up to fifty miles. Because this lender is highly familiar with the area, he may already be aware of the small business is question, and even though his comfort zone may be in real estate of some kind, under the right situation may consider helping a small business or entrepreneur that has the right business plan and demonstrates the right passion for the enterprise in question. The hard money lender may only be looking for a three year or less investment and will require that the owner and any financial backers of the enterprise have personal investment in the company. That demand may require that these individuals put up their own homes as collateral on the hard money loan.
Internet Venture CapitalEntrepreneurs seeking funding can find Internet venture capital via investment networking sites which pair the "haves" with the "have-nots." Sole proprietors, partnerships, and limited liability corporations can utilize web-based forums to search for business startup funding sources around the world. Even in the face of global economic woes, there are still companies and private individuals that are looking for new businesses in which to invest. Unrated entities with little or no history of stock market performance may yield the highest returns; and some investors are willing to take a gamble on an unknown with potential to earn big money, even in a volatile market. Venture capitalism requires a mutual trust between those who need seed money and those who are willing to finance startups. But the shared benefits may be well worth the time and collaborative effort. "Two are better than one; because they have a good reward for their labour. For if they fall, the one will lift up his fellow: but woe to him that is alone when he falleth; for he hath not another to help him up" (Ecclesiastes 4:9-10).
Internet venture capital sites which specialize in bringing investors and borrowers together bring a new trend to commercial financing. Instead of running the risk of getting turned down by banks and lenders who require A-one credit and lengthy applications, borrowers can join sites by signing up for a password-protected member login. Participants must have an active email address in order to receive notifications of funding sources. Potential investors also join as members and receive listings of thousands of investment opportunities from which to choose. These kinds of websites act as clearing houses for fledgling or veteran entrepreneurs who need capital and "angels," non-traditional lenders and investors, who have money to invest. Funding seekers can post classified ads online describing the amount of financing needed, a preferred industry, contact name, and a brief description of each venture. Investment needs range from less than $25,000 to tens of millions.
Once potential borrowers and investors sign up for membership on Internet venture capital sites, they become part of a huge database from which site managers compile listings of businesses seeking funding and investors which might be a close match. Borrowers and investors receive daily email notifications regarding those opportunities and investments which coincide with user profiles. Each party is given sufficient contact information to engage in negotiations and come to a happy medium regarding new ventures. Host sites may charge a commission on each transaction, or borrowers may pay a small fee to access email notifications. Regardless of the method used to exchange information or obtain electronic listings, the real advantage for borrowers and investors is a global connection and access to funding sources and investment opportunities that would never be possible via conventional means. By posting borrowers and investors online, each participant has access to domestic and foreign opportunities which could become lucrative.
Examples of the types of entrepreneurs seeking Internet venture capital include clothing designers, real estate developers, auto mechanics, and cottage industry owners, such as home-based textile artisans or owners of mail order bakeries. Merchants representing healthcare, retail, construction, engineering, education, and finance can all be found online; and there is most likely an independent venture capitalist on domestic or foreign shores willing to help foot the bill for startups. Providers of venture capital funds are investment companies which specialize in buying equity in firms belonging to a specific industry. By investing seed money in fledgling businesses, companies take a considerable risk; however depending on the industry, the risk may be well worth the returns. Venture capitalists that invest in green industry startups may realize significant yields in the next decade, as trends toward developing and implementing more environmentally-friendly enterprises continues to increase. Companies which promote sustainable agriculture, biotechnology, and alternative fuels are all top candidates for private online funding.
In order to obtain Internet venture capital, borrowers may have to make some concessions, including allowing lenders part ownership, or a stock in the new company. The amount of funding and the terms to which borrowers and lenders agree upon will determine the percentage of interest, or ownership. Some lenders of Internet venture capital become not only shareholders, but also limited managers in the new enterprise. To safeguard their investment, lenders may want to exert a certain amount of authority in overseeing day-to-day management. At the least, investors will expect a quarterly or bi-annual accounting detailing the new company's net profit and interest earned. Investors will also expect borrowers to submit a detailed business plan and quite possibly provide some of the funding themselves. Investors may match borrower funds or expect new entrepreneurs to obtain financing from a secondary source. The ability to obtain secondary financing can be an indication of a new business owner's creditworthiness and entrepreneurship. Local and online banks, friends, family, former coworkers, and business associates may provide secondary sources of financing.
Serious borrowers and investors may want to join several sites which specialize in Internet venture capital. Becoming an affiliate or network member is also a great way to access funding opportunities. New business owners should post well-designed, industry-specific sites online, not only to provide potential investors with detailed information about new ventures, but also to host merchant links which might open other funding opportunities. By becoming an affiliate, advertisers within the industry can drive traffic to the new owner's site and vice versa. The intent is to increase traffic by increasing online exposure. Fledgling ventures can post a single home page and sponsor affiliate links even if the business is just a startup. Domain name reservation will ensure that novice entrepreneurs have a web presence as the business develops. The best advice to potential borrowers seeking Internet venture capital is just go for it! Anyone with a great idea, a solid business plan, and the will to succeed should have little difficulty finding investors who are willing to take a gamble.