We won't kid you here. Finding a venture capital source is hard to get. You'll need a proven track record, top-notch management, and be in a business where high growth is more than probable. Venture capital (VC) firms have an affinity for the high-tech sector. If your company isn't in high-tech, don't lose hope just yet. VCs, especially those outside Silicon Valley, do work with non high-techs. First though, they must believe your potential for growth is strong.
The dot-com boom has taught venture capitalists to be extra careful when lending their money. The days of free-giving-before-doors-open are over. A venture capital source wants to know your company management and systems will be able to sustain rapid growth to achieve gigantic financial returns. After their dot-com lesson, VCs now focus on established companies. If you're still in start-up mode, you'll need to prove to them that you have a great history in building successful startups.
Dealing with VCs is not like dealing with your Uncle Marco. They'll scrutinize every financial figure, employee backgrounds, your own character, your knowledge, and your drive. It's vital that you know your stuff, and you can convince them that you're better than the ninety-nine other applicants. Normally, VC firms will want your company to have an exit strategy within five years. It can come by going public, or through an acquisition.
Build Your Company First
Remember, very few applicants get considered. From that, even a smaller percentage gets capital. Even if you're in high tech, we don't recommend this source of funding when you're just starting. It will take time away from more important matters. Instead, focus on building a great small business first. When you've done a great job, a venture capitalist source will come knocking on your doors.
Posted on February 18
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