Business Venture Funding

Today, venture capital has become a highly popular way in which people are getting their business venture funding from. The people who provide such kind of financing are called as venture capitalists. Basically, when they put in their investment, the thing that they are looking for is a return on investment. Their financial inputs in the company are an investment for them and eventually they are trying to make as much on their investment as possible. It is a known fact that venture capitalists look for companies that have a very good scope to grow. They are constantly on the lookout for entrepreneurs who have a solid business idea that has a lot of potential, hoping that these are the ideas that will turn into money-spinning businesses soon and give them a good amount of return on their investment soon.

However, if these business venture funding providers seem to be like money-hungry sharks to you already, you need to do a rethink. These people are highly important to the economy. Without their capital, a lot of small and medium businesses will probably be nipped in the bud. It is with this kind of business venture funding that these business ideas are able to see the light of day and maybe start making profits as well. When that happens, everyone is happy. The entrepreneur is happy because they get their business started. The venture capitalist is happy because there is a growth of their investment. The government is also happy because when a lot of such entrepreneurs are able to put their ideas into action, the economy grows. And when the economy grows, the general populace of the country becomes happy as well. Thus, it is not wrong to say that venture capitalists are an important link in the economy of a country.

Let us take a closer look at these vital providers of business venture funding here.

Who Are Venture Capitalists?

Most people think that venture capitalists are just people who have lots of money to invest in a potential business idea. They think that these venture capitalists operate individually. However, that is not always the case. Most of the venture capitalists out there don’t operate singly, but they operate in groups. These may be a part of a partnership concern where everyone pools in their finance. This is actually how they can garner such a lot of money.

The size of a venture capitalist can be vastly varied. These people could deal with mere thousands of dollars to even billions of dollars. It depends on what kinds of individuals are connected in a particular network. These people may be a group of investors or they might be affiliates or subsidiaries of the venture capitalist concern from whom the finances are pooled.

However, it is not just about the money. Venture capitalists also have a sound knowledge of how a particular business is operated. In fact, most people who provide such business venture funding won’t fund a business that they don’t have an interest in. That ensures that they can stay better connected with the business venture they are funding.

Venture capitalists are known to wait till the time a particular business starts showing profits. Since this does not happen any time soon, most business venture funding providers are prepared to wait for 5-7 years till the profits begin to show up. During this time, they put in several efforts to try and improve the prospects of the business.

Do Business Venture Funding Endeavors Always Succeed?

The truth is that all business venture funding collaborations don’t work. In fact, most of them meet with failure. This might happen due to a variety of reasons. Venture capitalists put in supreme efforts to make sure they are investing in a business with high potential but that doesn’t happen all the time. But, on the distaff side, if a business does make profits, then it compensates for several businesses that have failed before. The returns count be thrice to ten times what they have invested.

What Kind of Relationship Will a Business Venture Funding Provider Have with the Entrepreneur Who Receives the Funds?
The relation is very much like a partner but without similar privileges. It actually depends on what kinds of inputs the business venture funding provider has put in. The first relation is directly based on the share of the company, which is calculated at a predetermined percentage value of what the business turnover is. The venture capitalist also participates in various important aspects of the business such as planning its decisions and taking part in its managerial and strategic aspects. To do this properly, venture capitalists might use their own business knowledge or enlist the services of other business people. Sometimes, venture capitalists enroll executive people in the company they have funded.

What Volume of Business Venture Funds Can One Expect?

If you are the entrepreneur approaching a venture capitalist for your business venture funding needs, then you need do all kinds of preliminary research. You need to find a venture capitalist who is ready to invest in your business and, most importantly, who has an interest in your endeavor. But, what kind of funding can you expect? Most of these venture capitalists will provide you with seed capital to start the business, while others might want to invest only for businesses that are going a revamping such as an expansion. The size of the funding depends on the nature of the requirement.

These are some of the points that you should know about business venture funding. This is a popular business financing option right now, but you should know that it isn’t perfect. Also, getting a venture capitalist is not easy because so many people out there are looking for business venture funding right now. At the same time, venture capitalists are looking for entrepreneurs with that spark in them which can make ideas a success. They are looking for fast returns on their investment.

So, look for your options. Business venture funding is available but you need to see what closely fits your requirements and how wise it will be to involve the venture capitalist into your new business.