What is Venture capital and how it could help you
One of the forms of getting financial boost to your project is the venture capital. Special companies called venture capital firms provides financing to or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth in last period.
By taking advantage of the opportunities offered by venture capital, a company can gain not only an injection of money for the development of innovation, but also an invaluable transfer of know-how. In such an arrangement, both parties care about the greatest possible success of the financed company – for the capital provider it is more an investment than a loan, because it counts on certain profits in the future and therefore is able to put as much as possible into a given undertaking.
Therefore, small and medium-sized enterprises that have a stable position on the market, quite high growth potential and an idea for development, should seriously consider venture capital among all available forms of financing.
What is the procedure of applying for support from venture capital funds? What is worth remembering when reporting to an investor? What arguments will help convince the capital giver that it is worth investing in the presented venture?
Is venture capital good for my private limited company?
Venture capital means risky funds – this is not a loan or charity grant.
It is indeed so. Venture capital companies (also known as VCs for short) are approached by companies with potential for which it is virtually impossible to obtain, for example, a traditional bank loan – precisely because of the high risk of such an investment. Thus, it can be assumed that venture capital funds are intended for companies whose development is burdened with a high degree of risk.
However, venture capital is not a charity. When investing in enterprises, VC is expecting a profit, and not a small one. Therefore, for a company to have a chance to obtain this type of support, its idea must have exceptional growth potential that will compensate for the risk of investment.
On the other hand, for investors, the industry in which a given company wants to develop or its “age” is slightly less important. Companies using venture capital support are unique ideas, so it is difficult to determine when it would be best to allocate investors’ capital in them
First contact with a venture capital investor – how to prepare
Therefore, if the company’s management decides that it is worth trying to get support from venture capital funds, it should start by introducing itself. It cannot be done in person – to become a potential ward of the society, you should start by giving them an investment teaser.
An investment teaser, also known as an executive summary, is something like a corporate resume. Thanks to it, the company has a chance to introduce itself – both in the most formal and a slightly more advertising sense. Therefore, the teaser should contain a description of the company – its history, current situation, plans and assumptions for the future. Since the idea must be innovative and original – it is worth presenting a step by step vision of how the business will develop.
Make good impression and be professional
If you are interested in such form of financing you should know that such companies will perform very detailed audit of your enterprise or start-up project.
You have to be prepared for a lot of paperwork, reports, business plan and so on.
Even after preparing all these documents, reports and presentation you are not sure whether the financing decision will be positive.
To get a positive response, the team need to understand the potential of the project, which is why they will do a thorough analysis of your organization.
The team need to be sure that if the startup is going to succeed then the management, management team, or team of people who will work with the startup can work together with the team to make the most of the opportunity.
The team is looking for team of people who can work together with the team so that the company can thrive and achieve their goals.
There is a lot of competition in the market and so the team need to be in the right place to be in a position to make the right decision.
Tiny, small or medium – what size of enterprise is good for VC?
Well, first is to find a partner. You need to have good, high-value-add services and you have got to be able to pay for this service in a way that your customers can live with.
The actual stage of you enterprise generally doesn’t matter. The team and product matters.
You may be in the early stage of your project, you may be a small company, you may have some big enterprise and so on.
You need to be in the right place, as a good, well-resourced team, with a great financial management, that can support its growth.
I am not talking about just financial, but also the management. They have to be a little bit different, that is a key. As a good team, they can provide, a little bit of support, to the team that helps them to take the next step.
As a good management team, they can give support in all the phases of the startup.
The VC, as a more experienced partner, is in the right choice ?
So, you have to get a good team and a good management in order to be successful with this type of business.
And so, in the end, the best thing to do, is to get the right kind of people in the right place, with the right business, with the right management.
In the end you need to make the right decisions.
So, you need to get the right kind of people in the right place, with the right business, with the right management/
When you get a company that has a strong, good management and a great, well-developed team, in the right place, you will definitely be successful with the business.
If you can get a good management in the right place, and in the right environment, you can do what you want with the company. So the key for this venture capital is to make sure that the team that will be supporting the team, is in the right place.
If a company is in a very small and operates on small scale, and you do a very thorough research, and you also get in the right place.
If you get in the right place, and you are going to provide you a financial and other support, then your company is very sure that they can make it big.
If you get in the right place, and you are going to provide the right type of financial support, the people are the key to it and it is in everyone’s favour that they do the things that are needed in the beginning.
The team has to understand the business as a whole, not just the small, or the small, and it has to understand the business from a different, and a very good, point of view.
The team has to understand the business and understand the company, in order to get the most from the project and also from the financing.
If you are not in a good position to make a long-term investments you can always find some consultancy services in this area.