Keep Venture Capital Funding in Your Sites

Venture capital is not a thing of the past despite what some people think. The economic downturn certainly did lead to a temporary cutback in funding, but that is true for every business category. But even during the recession, hundreds of millions of dollars were invested by venture capitalists in small to medium sized businesses and not just large ones.  Don’t think for a minute that smaller businesses are excluded from this source of business funding.

It is true that venture capital flows into many companies that have already established cash flow and now hope to expand into new product lines. It is also true that some venture capitalists will only look at established companies that have proven track records. But there is plenty of this type of business funding available for startup funding for those companies with great products or services and a convincing business plan.  The key to finding these investors is getting help from a professional with the right connections. 

You need a certain amount of funding, but it doesn’t have to come from a single source of funding. A venture capitalist may love your business plan but decides that you need to find multiple sources. This spreads the risk for all funders. In that case, you can put together a package of funding that includes angel investors, equity partners, business loans and/or venture capital.

By finding more traditional investors willing to take a chance on your business, the venture capitalist is much more likely to fill the gap in funding. That gives you a head start for the second round of funding too as your business grows.

It’s nice when everyone can win during negotiations.  That is what happens when you pursue venture capital and agree to amend your business plan based on requirements by investors.  Entrepreneurs starting new businesses can sometimes dig their heels in and refuse to make changes to their “dream” ideas. No one is asking you to abandon your dream, but investors may very well ask you make changes based on their investing experience.

Large corporations seeking venture capital often agree to make business plan changes in order to convince business funders to invest. If well capitalized firms have to do so then you should expect businesses looking for startup funding will have to do the same thing.  You agree to some changes and the funder agrees to invest, so both of you win.

When you start looking for funding for your business, it’s important to realize that venture capital is still available and it’s available for startups as well as established businesses ready to expand into new products or services. But this is only one type of funding. There are many other investors looking for opportunities. You just have to be willing to pursue all funding avenues and not limit yourself to one. For example, you could find angel investors of equity partners.

In the final analysis, you can find business funding whether it’s business loans or venture capital or both. You just need to understand how to locate the right funding sources and then know how to convince the funders that your business is well worth the risk.

by Julie-Ann Amos, professional writer, and owner of international writing agency www.ExquisiteWriting.com

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