Venture Capital funding is one of the most popular and attractive investment options for businesses hoping to raise capital – and for entrepreneurs looking to scale quickly, it is definitely a faster and more lucrative option.
But, what is venture capital funding? And what does a venture capital firm offer besides investment?
WHAT IS VENTURE CAPITAL FUNDING? HOW DOES IT WORK?
A venture capital fund is an investment fund made up of contributions from wealthy investors or companies. All investors are made aware of what funds or businesses their money is being invested into, as well as the potential risks and rewards of such investments.
As part of their investment, many investors may have additional requirements. For example, some would want to sit on the board of directors, or be involved in business restructuring and recruiting. Since this constant communication can be a time consuming task for many businesses, it is advisable to partner with a venture capital firm with experience in investor management and relations.
Perhaps one of the greatest benefits of working with investors is that, due to their industry knowledge and experience, they can offer you a lot more than growth funding alone. Since their interest is in the company and, thus, their investment, they are willing and eager to see your business grow.
WHAT IS THE ROLE OF A VENTURE CAPITALIST?
With the rise of “lazy investors”, even someone with the most ill-informed views of what constitutes a good investment can now back a start-up. However, even with the increase in alternative forms of financing, such as crowdfunding, where a business can secure millions without losing equity, venture capital reigns true.
So what is it about venture capital investment that still attracts businesses to part with chunks of equity and go down this route?
The main reason for this lies within the role of the venture capitalist himself. Besides capital injection, they bring with them the necessary business tools needed to see a small business move from good to great.
THE ADVANTAGES OF PARTNERING WITH A VENTURE CAPITALIST
Experience and efficiency. Seasoned investors know the necessary steps to take in order to turn a good idea into a million dollar business. They have the capability to streamline business channels, and ensure the company runs in a productive manner. When a venture capitalist buys into a company, they put themselves in a position where they can help formulate the strategies and direction a business should follow – working from the top down.
Provide support services. Employees are a company’s most important assets, but they can also be the most costly. In recent years, investors tend to have their own in-house marketing, finance and legal teams that they offer to the businesses they fund. This helps a company keep its start-up costs down.
Better business practice. Investors with experience can add significant value by helping a company instill better governance through their processes. This is extended to financial controls, reporting, business ethics, and contractual procedures.
Are you looking for a venture capitalist to invest in your business?
If you have a unique business idea in an untapped market niche, we want to hear from you. Equity Alliance International helps market your business to investors who are already looking for something new to add to their portfolio.
Through our targeted campaigns, we deliver increased awareness, liquidity and stock value to your business. Work with us to communicate your market value to the investor community.