Short Guidelines on the Funding Secrets of Venture Capital

Entrepreneurs, especially the ones fresh of the idea block are always on the lookout on how they can raise capital. If you are someone in such a dilemma, then you’re probably weary of the many options you’re facing. One of the most complicated one, although it seems to be in everyone’s lips these days, is the venture capital agreement.

Nothing is really secretive about it. We probably just got so used to the other types of getting funding for our business, like getting bank loans, so when this new more creative one comes along we get intimidated. This article will be a resource that uncovers the funding secrets of venture capitals.

What is Venture Capital?

In simple terms, a venture capital is a stake in a company offered by its owner so he can ask for a loan from an investor. To have a better idea, think of it as being similar to how banks requests for a loan guarantee or a collateral from the borrower. Only in this case, the lender or the investor expects the collateral to be an asset part of the company or an actual share in the company holding. Hence, the stakes are higher. Venture capitalists seeks maximum profit for their investment. In exchange, an entrepreneur can have access to seed funding that could easily sum to millions of dollars.

However, as inviting as their offer may sound, this agreement is only reserved for certain types of companies. Venture capitals are only able to lure investors if the company that offers it looks just as enticing. Meaning, that the company has to pass certain standards before it can seek business capital this way. The company has to be able to promise a large return of profit in the least amount of time for investors to even start thinking about it. Because after you’ve made a proposal, investors would shop for offers by other companies within the same field that could be better.

What you’ll have to do to Get Funded?

The first thing that you’ll need to have is a business founded on a goldmine of an idea. It has to be an idea that is unique or revolutionary. It must be on the same level of how Apple revolutionized the smartphone industry with the iPhone and turning it into the most lucrative industry in the world.

In addition, you’ll have to propose a concrete plan for the execution. You’ll hear it often from investors; an entrepreneur comes along with a brilliant idea but because he doesn’t have a solidly laid out plan that has deliverables in certain periods, the investors didn’t choose him and went ahead with the next businessperson who has thought of the execution more.

Consider the Risks

Through a venture capital, an entrepreneur can get an idea off the ground into a full-blown business in no time. However, it doesn’t mean that you’ll have to grab it the first chance you get. Consider first that you’ll have to give up partial control of the company; that you’ll be expected to perform profusely. If you’re not able to handle the pressure that is sure to come along with that, then think twice.

Author Bio:

John Lewis is the financial lead at "http://www.instantpersonalloans.co.nz/", where they help people with funding for their business and personal purpose, borrower gets an instant loan for their business or pesonal reasons with getting pre-approval in 30 seconds for instant result.