Have you ever wondered how some companies find funding
while others, possibly yours, barely hold their head above
water? Often, the key to success during the delicate
start-up years is having the right amount of capital to
launch development and marketing efforts. Once a company's
well established, funding can support even stronger growth
and expansion initiatives. Venture capital acquisition can
help. Venture capital is funding provided to budding new,
fast-track companies by other professional investors.
Venture capitalists review several companies, choosing just
a few to invest in based on management credibility,
long-term growth potential and business integrity, among
other things. These venture capitalists may use funds from
high net worth individuals, foundations, corporations,
pension funds or their own personal capital equity to help
support the success of new business ventures. Their various
investments in start-up companies collectively represent an
investment portfolio, thus reducing overall risk. These
investors focus on acquiring a high rate of return in a
five to seven year period.
While many venture capitalists are generalists, or supply
funding alone to a broad range of specialized sectors,
others offering expertise in one or more key roles within
the company. Seed investing refers to funding provided
before a real product or business is even created, or when
a company is at the very early, ground-floor development
stages.
Venture capital sponsored fairs, panel discussions and
seminars are great vehicles for venture capital
relationship building. Attorneys, consultants, business
brokers and accountants also offer contacts with venture
capitalists. When seeking funding, relationships are key
and competition is high. First, identify a small number of
companies or individuals holding similar goals to your
company's. Make sure you agree when it comes to business
growth, geographic positioning and investment scope.
Venture capital assessment demands a great deal of time and
energy, from presenting a well-developed business plan and
executive summary, to educating your investors about your
goals, budget, industry and growth potential. Remember to
communicate with your contacts on a regular basis,
nurturing the relationship and keeping them informed of
progress and news. Above all, stay optimistic, learn from
your mistakes and adapt your strategy.
The following organizations can provide a wealth of
information for those researching venture capital avenues
and sources:
- The National Venture Capital Association, www.nvca.org
- The Center for Venture Education, kauffmanfellows.org
- Emerging Markets Private Equity Association, empea.net
- Venture Capital Task Force, vctaskforce.com
- Private Equity Central, privateequitycentral.net
- Wall Street Journal's Start-up Journal,
startupjournal.com/partners/kennedy.html
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