Internet Venture Capital
|
Entrepreneurs 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.
|
|
|
|
