VENTURE CAPITAL CONSIDERATIONS
Being in “love” with your idea does not mean that venture capital (VC) will easily come your way. There are literally thousands of new ideas put forth every month, and each founder feels that their business/ venture is worthy of VC support. Obtaining VC is a difficult and very involved process. Not all VC requirements are the same for all investors. The following are a few observations:
• Just as with other lending options, i.e. banks, VCs want to invest in a business that does not need their capital to survive.
• The strategic focus plan that we use as a hands-on working document for our clients is usually 12 to 15 pages long. VCs will seldom look at anything longer than 3 to 4 pages, thus preparing such a document is critical to any chance of obtaining VC.
• Traction is important to show; can you demonstrate that your business will work?
• Investors don’t want to cover previous debts.
• Another factor that may arise when VC is involved. The investors may want to bring in an outside management team to run your company.
• VCs are very business savvy. If your business does not measure up, they will say so; you will more than likely lose any argument.
In my experience looking for VC is not always the best solution. Many small business owners lack the experience in all phases of growing a business. The concept may be the next “apple”, but without a mastery of the tools needed to grow a successful business it may turn into a venture failure.
Instead of spending your time looking for VC, spend your time exploring ways to overcome the need that you hoped the VC will solve. The help you need is often within reach, someone that is closer than you think.
“The best way to get something done is to begin.”
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