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Entrepreneurs,
especially the ones fresh of the idea block are always on the lookout
on how they can raise capital. If you are someone in such a dilemma,
then you’re probably weary of the many options you’re facing. One
of the most complicated one, although it seems to be in everyone’s
lips these days, is the venture capital agreement.
Nothing
is really secretive about it. We probably just got so used to the
other types of getting funding for our business, like getting bank
loans, so when this new more creative one comes along we get
intimidated. This article will be a resource that uncovers the
funding secrets of venture capitals.
What
is Venture Capital?
In
simple terms, a venture capital is a stake in a company offered by
its owner so he can ask for a loan from an investor. To have a better
idea, think of it as being similar to how banks requests for a loan
guarantee or a collateral from the borrower. Only in this case, the
lender or the investor expects the collateral to be an asset part of
the company or an actual share in the company holding. Hence, the
stakes are higher. Venture capitalists seeks maximum profit for their
investment. In exchange, an entrepreneur can have access to seed
funding that could easily sum to millions of dollars.
However,
as inviting as their offer may sound, this agreement is only reserved
for certain types of companies. Venture capitals are only able to
lure investors if the company that offers it looks just as enticing.
Meaning, that the company has to pass certain standards before it can
seek business capital this way. The company has to be able to promise
a large return of profit in the least amount of time for investors to
even start thinking about it. Because after you’ve made a proposal,
investors would shop for offers by other companies within the same
field that could be better.
What
you’ll have to do to Get Funded?
The
first thing that you’ll need to have is a business founded on a
goldmine of an idea. It has to be an idea that is unique or
revolutionary. It must be on the same level of how Apple
revolutionized the smartphone industry with the iPhone and turning it
into the most lucrative industry in the world.
In
addition, you’ll have to propose a concrete plan for the execution.
You’ll hear it often from investors; an entrepreneur comes along
with a brilliant idea but because he doesn’t have a solidly laid
out plan that has deliverables in certain periods, the investors
didn’t choose him and went ahead with the next businessperson who
has thought of the execution more.
Consider
the Risks
Through
a venture capital, an entrepreneur can get an idea off the ground
into a full-blown business in no time. However, it doesn’t mean
that you’ll have to grab it the first chance you get. Consider
first that you’ll have to give up partial control of the company;
that you’ll be expected to perform profusely. If you’re not able
to handle the pressure that is sure to come along with that, then
think twice.
Author
Bio:
John
Lewis is the financial lead at
"http://www.instantpersonalloans.co.nz/", where they help
people with funding for their business and personal purpose, borrower
gets an instant
loan for their business
or pesonal reasons with getting pre-approval in 30 seconds for
instant result.