One of the most important concerns of people who are planning to start a business is to how are they going to fund their business. Of course, a great business plan would not work without the funds to run the idea. Some people borrow money from rich friends, some use crowd-funding technique while other loan from the bank or better yet seek equity funding from a venture capital firm.
Most business owners opt for equity funding from a venture capital firm. However, before you seek approval from venture capital investors, you should make sure that you prioritize their welfare. You should understand that once they invest in the company, they would be part owners and not just mere creditors. Therefore, they need to see long-term revenue with your company.
Here are other tips on how to find venture capital investors:
1. Make sure to come up with concrete business plan presentation – most investors look for businesses with great plans that they can support. You could not expect investors to come in without compelling ideas for your business. Therefore, before seeking for VC’s, you should first take care of the business plan that you will present to them.
2. Show the investors the return of investment that they could expect – most investors are looking to three to five times return of investments. You should make sure to present to them clearly, how much they should expect in return for investing in your company. Investors will be more confident to spend money on your company when they know that they are dealing with a businessman who knows exactly what he is doing.
3. You should let them know that you know what they want – VC’s are surely expecting return on their investments from five to seven years time. With this, you need to come up with exit strategy at the beginning of the discussion. You should be ready to explain to them where your company is heading as most investors look forward to another investment opportunity. You should be ready to sell, merge or go public with your company to satisfy your investors.
Following the tips mentioned in this article will help you find venture capital investors that you need for your business. However, you should make sure first, that this funding option is the one best suited for your business. If you find yourself not agreeing on some terms like having these investors as shareholders then you should look for other options to fund your business.
It is also very important to assess your potential investors. You should make sure that they have long-term record of success and that they are reliable. It is also very important that you are comfortable with their personalities and characteristics as you will be partners in the company. You will be spending many years together so you should make sure that you have great working relationship. To succeed in your business, you need not only fund or money but also peace and harmony among workers and owners.
Mabel Miles likes to share information on business plan template and nonprofit business plan as well as a host of additional services.
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