Venture capital is probably one of the least understood funding categories because in the minds of many entrepreneurs it is intricately linked to well-established larger businesses that have great new ideas. Small businesses or start-ups are excluded. Is that true?
It is true that venture capital tends to fund companies that have already shown the ability to generate cash flow. Some funders have lofty expectations as to the kinds of company they are willing to invest in which virtually knocks the new start-ups off their list. But that is certainly not true for all venture capitalists, and the key to finding those funders who are looking for new entrepreneurs is to get help. You can try to find them on your own but venture capitalists belong to the equivalent of a private club, and you can’t just walk in without an introduction.
The next question of course is why should you pursue venture capital if it’s so hard to get? There are plenty of reasons.
Mix and Match Funding
You need X amount of dollars, but does it all have to come from the same funder? Of course not. There are venture capitalists who may adore your business plan but are only willing to fund your project if you consider finding other sources of capital. Find some of those other sources like loans or even family investors and now the venture capitalist is more willing to fund the final amount you need to get your business off the ground.
Even as you pursue angel investors or equity partners you can continue looking for venture capital.
The Give-Give Approach
It just may be that you can make some changes to your business plan that will please a particular investor. No one is asking you to give up your dream idea or your perfect business model. But the fact is that you have to build some flexibility into your plan if you expect to have access to as much business funding as possible.
In other words, an investor may be willing to provide startup funding if you are willing to amend your business plan to accommodate the funder’s requirements. If you think that is not fair since you have a startling new idea that perfectly fits your spirit of entrepreneurship then consider one fact. Even multi-million dollar businesses must agree to make changes to their business plans, products, marketing goals and so on just to please investors.
If businesses with this kind of clout must be flexible, then small to medium sized businesses should expect to have to do the same.
Never Say Never
Venture capital is available for smaller companies or even startups. But it is certainly not the only type of funding available. There are other investors who are looking for opportunities besides venture capitalists. You can consider taking on equity partners, taking out business loans or searching for angel investors. There are many types of investors, and you need to vigorously pursue them.
The bottom line is that you can find business funding through private investors or as business loans whether you need startup funding or funding for a business that is poised for growth. You just have to know where and how to look and what to say when you find it.
More detailed information and useful advice can be found at http://www.funded.com . Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need to access a vast network of business people, entrepreneurs, partners and service providers to help you start, finance and run your business, check out http://www.funded.com.