Why get venture capital? Why look for investors? Venture capital is oftentimes key to a successful starting business. But, it is important to know what you are getting into and how it will affect your business.
If you are a business owner than you aware that one of your business challenges is getting your company funding. You may be in need of a venture capital investment. This type of investment can give your company the resources it needs to grow to it’s full potential. A venture capital investment can be used for a variety of things. You may want to invest in top notch talent, new machinery, manual laborers or you may need to invest in research or new technology. Whatever the reason, a venture capital investment can help you business grow.
If you go this route, you’ll need to be prepared to give up partial ownership of your company. Venture capital firms will require a fair valuation of your business shares and then will acquire a set amount of shares at an agreed up price. Generally speaking, the more established and profitable your business is, the less the stake in your business the venture capital company will have. If you are a start up and have yet to generate revenue you should be prepared to give up a substantial amount of ownership and control. Equity investment companies are cut throat with their investment money and will want to ensure your company succeeds. You will be required to sign contracts that bind you to your financial and growth projection. If you fall short of your expectations you could be penalized financially and possibly driven out of your own company.
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