Sometimes when you start a new business you will need money to get it up and running. You will need to pay rent and purchase space along with other items to make it run smooth and efficiently. You may even need to pay employees.
There are several places that you can get money from. If you have a savings account or even by obtaining a second mortgage on your home.
In some instances you can bootstrap your business which means that with a small investment , you will then be able to use the profits from sales to grow your business. If you have low start up expenses this may work well and then you will not have to pay employees when you first start your business.
You can obtain a bank loan, however, your will have to meet some tough criteria through the bank and it can be a long and tedious process.
Then you can try another way, Venture Capital which is a good means in obtaining a large amount of money with the help of businesses. With Venture Capital assistance you will be able to make your business grow quickly.
There is a standard approach to a venture capital when you open a fund. This fund is money that the Venture Capital firm will invest. The firm then gathers money from wealthy individuals and from other companies and many other resources that they would have to tap into.
The Venture Capital Firm will then invest the monies collected in several ways and then each investment has its own profile. However, keep in mind that with this investment, will have risks (as does any investment) but it can have great rewards to it as well.
After the investment the Venture Capital firm will anticipate that all the investments made will liquidate in a time frame from 3 to 7 years. This means that the Venture Capital firm will expect that each of the companies it has invested in will go public to sell it’s shares on the stock exchange or be bought out or acquired by another company.
Whatever the case, the money that flows from the sale of stock to the public or to the acquirer will let the Venture Capital firm cash out and place its proceeds back into the fund. After all is said and done the goal is to have more money then was originally invested. These funds are then distributed back to the investors based upon what they originally contributed.
Before a Venture Capital firm assists a new company they will need to create a business plan (the same as you would have to do if going through a bank). The Venture Capital firm then looks at the business plan and let you know if what they see is worth investing money into. Over time a company receives three or four rounds of funding before it will actually go public or is acquired.
In return for the money the Venture Capital firm will receive company stock as well as some of the control over the decision that the company will make during that time frame.
If you look at it another way the Venture Capital Firm can offer more then just money they can help you with good contacts in the industry or even it’s experience with your industry when it comes to making decisions for the growth of your company.
In the long run, a Venture Capital Firm is a very good option if you have a good business plan and have something that they feel is worth investing in.
