Understanding
Venture Capital Funding

Venture capital funding is a mysterious concept in the business world. Most MBA’s are taught to write a business plan and present it to a bunch of Venture Capitalist and bingo…Money, Money, Money, they hit the jackpot! Unfortunately, this is not how this process works.

“There is no shortage of money looking for a home” Keith J. Cunningham

“Raising Money is more than simply having a hunch or inventing a good idea, you need a plan. Make that a Plan!” Keith Cunningham

Venture Capital Overview

Very specific principles of business growth strategies, money management concepts, and team management, need to be understood first, prior to any sort of presentation venture capital funding.

What is Venture Capital

Venture Capital Funding is a type of equity investment usually best suited for rapidly growing businesses that require a lot of capital or start-up companies with a strong business plan. A typical venture capital funding investment usually requires sale of 25% to 55% of the business to the investing company.

Understanding Venture Capital Funding

Finding a source for venture capital funding can be a challenge unless you get assistance from an expert like a business consultant or coach familiar with the available funding market. Venture capital is used for funding companies that are seeking money and are ready to pursue new markets or market new products or services.

Funding your company through venture capital is one of those topics which is frequently misunderstood. All too often, people think only large businesses able to take significant risks are capable of obtaining venture capital funding. It is like there is a mysterious pool of money out there which only a select few know how to access. In reality, all size businesses can find venture capital funding to finance their business expansions, but they need to know how to get it.

Businesses that seek this kind of money source are usually those that have decided to launch a new business, have created an innovative new product or service, or desire to expand into new markets which require new capital acquisitions that are outside of the immediate reach of the business.

In order to prove your business qualifies, investors are looking to minimize their risk. Every Venture Capitalist is looking for different criteria in regards to the terms or ROI (return on investment) they expect on every deal. So how does one know what to include in their business plan to ensure a quality offer?

To consider getting qualified for venture capital, we must understand that these investors are like any of us, they are simply people with access to money. We must ask ourselves the following questions:

What would I look for if this was my money?

Who would I give my money to? Am I going to give it to just anyone?

If I were looking at one hundred deals on my desk, how would I decide where to place my money and with which company would I invest?

Answer… Management Matters Most!

“’Money follows management, and money loves a track record.’ This is the mantra of investors.” Keith Cunningham author of Keys to the Vault

If Bill Gates, Warren Buffett or Steven Spielberg called you today to invest with their new business venture, you would find a way to give them money because you know they are winners.

This is the mindset of the investor; venture capitalists want to bet on the winning race horse. They know they won’t win every time, but they can hedge their bet on proven business winners that can bring in the money.

Inexperienced?

So what do you do if you have a great new business concept, but no experience?

You need to find a team of successful people to buy into your idea and jump on board as your business advisors, partners, or part of the management team. This process will also show you how good your idea really is in the minds of others. A business coach or consultant can also help you establish this process and often times put you in contact with parties that may have potential interest.

A Quest for Excellence

Venture capital funding is not always the solution. Most companies that seek venture capital are looking for funding to help them grow. They may want to begin a brand new business or expand an existing business, but either way traditional financing has proven to be too difficult to obtain. This is where most businesses get lost in the search for funding and paralyze their perspective and creativity.

A business coach can assist with seeking and securing venture capital, or potentially even better, the business coach can show you how to eliminate the need for venture capital in the first place.

Attempting to find venture capital without professional assistance can be very difficult. A business coach has the right connections and a thorough understanding of the venture capital marketplace. Different funds often focus on specific interests based on particular markets or products. A company can save a lot of time, money, equity and frustration by using the services of a business coach familiar with venture capital funding procedures.

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