Venture Capital Broker
A venture capital broker can help hopeful entrepreneurs find suitable investment opportunities. It can sometimes be difficult for deserving companies to find willing investors. Entrepreneurs who wish to get in on the ground floor of a growing business might have difficulty locating such opportunities. Brokers who specialize in creating a bridge between companies and investors can provide a very useful service in the marketplace. However, there are many investment firms that prefer not to utilize the skill of a broker, but would rather locate opportunities for investing on their own. For many entrepreneurs, the thrill of the hunt is a big attraction. Finding and researching a good prospect for investment is not a task that many capitalists are willing to forgo. That is not to say that there are not opportunities for professionals in this field. A venture capital broker may wear other hats in the process of procuring capital for businesses in need of financing. Brokers may not always have the best interests of the client at heart. Since payment to brokers is generally only made if the deal is a success, they may not be objective as to the needs of the client. For example, if less than favorable details emerge after negotiations on a deal have begun, brokers might be reluctant to point out any problems. Doing so could destroy the deal and rob the brokers of a success fee, causing them to walk away empty handed.
A qualified venture capital broker will have a keen eye and sharp instincts when it comes time to choosing a candidate for investment. There are certain things that a wise investor will look for when making a decision on whether or not to fund a specific company. The products that the potential company offers should be unique, but not too much so. Their must also be a sufficient market for the product if the business can expect to succeed. But if a company has found an untapped market with a singular and unique product, that company may be a good candidate for investment. Companies that are seeking financial backing should keep a few things in mind as well. Overselling or exaggerating the business's prospects is never a good idea and could actually turn off potential entrepreneurs. Out right lies or distortions will come back to haunt the budding organization. And no matter how dire the need, a company that is seeking funding should also take the time to get to know the venture capital broker and the investors as well. These financiers will be working closely with the company and if there are any conflicts or disagreements on important issues, these things should not be simply swept aside for the sake of obtaining needed cash. If negotiations with potential financiers fall through, a company should not loose heart. There are other investors who may be a better fit.
A good venture capital broker would be able to represent a client with a potential company and try to work out a deal. While there are many ethical and reputable brokers, there are also unscrupulous ones. Some of the problems that clients have faced are excessive commissions and fees or bringing in another broker when it is not necessary and collecting a fee for this extra broker. Before signing agreements with any brokers, a potential client should take certain precautions and avoid several pitfalls. These pitfalls might include exclusivity contracts, cancellation clauses, double dipping, and mixed loyalties. It is generally never a good idea to sign a exclusivity contract with a venture capital broker. Doing so could mean that the client ends up paying fees to brokers for financial dealings that the charging agent has no connection with. Cancellation clauses can be another problem area. These clauses might mean that an investor or company must stay with an agent over a long period of time, regardless of whether or not the client is satisfied with the agent's work. A careful reading of all contracts is a must. Hidden compensation clauses could be buried in the contract, allowing brokers to double dip. Honest brokers will place their first loyalties with the client rather than themselves. If an agent seems to be lacking in this area, a potential client might want to follow their instincts and move on.
A venture capital broker can help entrepreneurs who are looking for a good place to invest. The advice of these professionals can help to steer investors in the right direction and, hopefully, steer them away from dangerous or risky prospects. Many of these brokers will not charge up front fees for their service. They will generally only charge a client if the investment is a success. Investments of this nature are always made in the hope that profits will be realized. The Bible mentions the hope that believers can have in God's word. "They that fear thee will be glad when they see me; because I have hoped in thy word." (Psalm 119:74)
Firms that staff a venture capital broker may also employ other financial professionals. Partners in an investing firm might be categorized as associates, junior and general partners. A managing partner may take a strong leadership role in an agency. Since this is a relatively small industry, finding work in the investment field can be difficult. Whether an investor decides to consult a professional or branch out on their own, there are opportunities for profit and growth for the savvy financier.
Venture Capital ConsultantA venture capital consultant is perhaps one of the first resources a young company might try to tap in the hunt for large amounts of money to fund its enterprise. This person can talk at length with the young company's executives and ascertain the culture of the company as well as its potential for mega profits in the future. If a company's officers do not have the time to go out and find firms to provide these large amounts of money, a venture capital consultant can be a good choice. The consultant will make a fee, sometimes based on how much money is procured from a source. And because venture capital firms may often put up millions or tens of millions of dollars, those fees can be quite handsome.
In many cases, VC firms go after companies before they reach out for assistance. Often a venture capital consultant isn't needed because the hunt has already been conducted and the VC firm has bagged its newest client company. The aggressive nature of a VC firm is easily understood when the profit potentials they seek are revealed. VC firms look wide and far for a young startup company in particularly profitable fields of endeavor. The high tech field of computer related products and the biomedical field where new drugs and other products have profit potentials beyond imagination. VC firms typically look for these small companies just starting up and needing loads of cash for research and development. In return, the VC firm negotiates part ownership of the company, a voice in leadership and direction, and when the company goes public in future years, a very tidy profit is made.
But some businesses can fly under the radar, and VC firms can miss an opportunity here or there. When that occurs, if the company fits the profile and the profit making potential for which VC firms are searching, that young company can be in the driver's seat as a number of firms may be in the wooing state of mind. That may be a good place for a venture capital consultant to be. Instead of being in a broker position, the advisor can actually be in a position to find the best fit between funds provider and needy company. When the consultant becomes a hunter for funds, there is the possibility of fraud taking place.
Sadly, a so-called consultant has taken money from small companies looking for investment money, but never delivering on the goods. A venture capital consultant may ask for money upfront as a deposit. If the consultant is not working on a contingency basis, he has no real incentive to find the firms who are funding at the time. This alone should be a huge factor in a company deciding which consultant to use. With the stakes being so high, everything about a VC advisor/broker should be checked and thoroughly investigated. Many people have summarily dismissed Jesus, believing Him not to be God or the only Savior of the world. They have conducted no analysis, and even when Jesus said, "I and my Father are one," (John 10:30) they conclude He is either a liar or a lunatic, but the third conclusion is inescapable upon investigation.
Should a young company seek out a venture capital consultant, it becomes very important for that broker/advisor to understand the culture of his company client. That means that the company will have a certain openness or closed thinking regarding the acceptance of strangers coming in and helping or even taking over direction of the company. Some companies will have owners or directors that will resent and even resist any outside perceived interference and the VC firm chosen for that company will have to be a more hands off philosophy. But that is not the usual method of operation for most VC fund suppliers, so a venture capital consultant must have a widely varied stable of VC firm possibilities to present to client companies.
The VC consultant/advisor has a very limited audience from which to draw his business. While there may be many startup companies throughout the country that have good business futures, VC investors are not interested in clothing companies, or car manufacturers or other possibilities. Venture capital firms draw their money resources from pension funds, retirement accounts, ultra wealthy individuals and other similar investors and they are managed by former investment bankers are high finance managers. They possess a laser like focus on the high tech and biomedical arenas. These fields have shown to have the most potential for the kinds of extravagant profit potentials.
The person who desires who desires to hold a position of venture capital consultant will need a solid background in high stakes finance and investing. He will be required to know the language and the unspoken goals and demands of those who have the resources to invest millions of dollars in a potential company. This person will have had to spend a great deal of time getting to know the philosophies and cultures of a number of various VC firms, and begin to know intuitively how his various clients will fit into their demands and requirements for funding. And should those companies that come to him for help not qualify for VC funding, the consultant/advisor should be able to point the company in other directions, such as the possibility of an angel investor or hard money lender. These lenders, although not possessing the deep pockets of a VC firm, may prove to be a great option for some companies.