Finding venture capital investors is often a bit easier than finding angel investors. This is mainly due to the fact that venture capital firms present themselves as professionals looking to invest in small and medium-sized businesses. Many angel investors generally do not advertise that they invest in small businesses, as they are simply individuals and not large corporations looking to make a name for themselves within the industry. As such, it is relatively easy to find these venture capital investors. First, when looking for this type of financing, you must first determine whether or not it is a good fit in terms of its ability to provide a substantial return on investment. In many cases, these companies will want to see that their business can grow at a rate of at least 30% per year if they don’t hire. As such, if your business cannot support that type of growth, then it may be in your best interest to work with a middle-market financing source that will be able to provide you with the capital you need without requiring you to sell a substantial portion of your business.
Whenever you work with venture capital investors, you can anticipate that they will want to have at least a 70% controlling interest in your business. This is due to the fact that these companies need to produce very high returns on their investments for their investors. Also, most venture capital firms provide more than $5,000,000 for companies. As such, it is extremely important that you have a rapidly growing business that can support that size of investment. If you can do this effectively, your chances of receiving money from a venture capital firm will increase significantly.
In closing, venture capital investors are a great way to fund a great business concept, new technology, or fast-growing business. However, the tremendous disadvantage of this matter is that they will want to take a substantial part of the business. At any time they can replace you with a different CEO if they feel you are not growing the business fast enough. However, if you are a savvy entrepreneur, then you may find that working with a large venture capital firm or related brokerage may be best for you. As always, you should have the right accounting and legal advice on staff to ensure you get the best possible deal from these funding sources.