What is Venture Capital?
Venture Capital is the money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important wellspring of funding for new companies that don’t approach capital markets. The investment store makes cash by owning equity in the organizations it puts resources into, which more often than not have a novel innovation or plan of action in high technology industries, for example, biotechnology, IT and programming.
The typical venture capital venture happens after the seed funding round as the first round of institutional money to finance development (likewise alluded to as Series A round) in the enthusiasm of generating an arrival through a possible acknowledgment occasion, for example, an IPO or exchange deal of the organization.
Why venture funding can be Ideal for it?
Why venture funding can be Ideal for it? It infuses longterm equity finance which gives a strong capital base for future development. The financial speculator is a colleague, sharing both the dangers and prizes. Investors are compensated by business achievement and the capital gain. The investor can give pragmatic exhortation and help to the organization dependent on past involvement with different organizations which were in comparable circumstances. The investor likewise has a system of contacts in numerous zones that can increase the value of the organization, for example, in recruiting key staff, giving contacts in universal markets, acquaintances with vital accomplices, and if necessary co-speculations with other funding firms when extra adjusts of financing are required. The financial speculator might be equipped for giving extra adjusts of funding should it be required to back development
Mode of investing by Venture capitalist
A Venture Capitalist or Investor can fund your business on the following basis
As a stakeholder:- Most of the time An investor can insist on taking some shares in your ventures however ensure that the stake remains below controlling level. These stakes are generally sold after business gains a profitable valuation
As a Loan:- An investor can give the fund a loan to you which may be zero interests at starting and the interest rate keeps increasing as the business settle down. After a certain date, the loan principal has to be repaid along with a high-interest rate as agreed initially
Mixed:- It can be a mixture of both two where an investor can finance as a loan with an option to convert it in Shares or stake in the venture
However, way it is very important to appoint an expert on your behalf to negotiate terms so that you can get a fair deal and the investor should not put unfair terms on you
What is the importance of Presentation for venture funding?
As it is said, Food should look good before it can be tasted. Same with the presentation, Your idea may be the next big thing however no one will look at it until it looks appealing. Appealing means there are, the Main concept of business, It’s present and future plans, and most important it financial attractiveness.
Here as well an experienced advisor can help to prepare a proper projection for your business along with presenting your financial details in a most appropriate way
What is the main reason for rejection?
Improper presentation of the concept
Weak financial analysis
Non Practical projections
No clear future prospects
No Backup plans
No clear indication of return on investments