Venture Capital

Venture Capital

What does the term Venture Capital mean, and is it the right thing for your up and coming business? This is from the article in Entrepreneur.

What Is Venture Capital?

What It Is: Institutional venture capital comes from professionally managed funds that have $25 million to $1 billion to invest in emerging growth companies.

Appropriate for: High-growth companies that are capable of reaching at least $25 million in sales in five years.

Best Use: Varied. From financing product development to expansion of a proven and profitable product or service.

Cost and Funds Typically Available: Expensive. Institutional venture capitalists demand significant equity in a business. The earlier the investment stage, the more equity is required to convince an institutional venture capitalist to invest. The range of funds typically available is $500,000 to $10 million.

Ease of Acquisition: Difficult. Institutional venture capitalists are choosy. Compounding the degree of difficulty is the fact that institutional venture capital is an appropriate source of funding for a limited number of companies.

Amy Rees Anderson of Medi Connect Global advises, “Think twice before you consider venture capital. Consider bootstrapping, angel funds or private individuals first, because venture capitalists will take 30 percent to 35 percent of your company. 'Once you raise capital, whether or not you still own a majority of the company, you work for them.' And don't ignore liquidation preferences. A venture capitalist who stipulates two times liquidation preference would be entitled to receive two times his or her investment before remaining funds are disbursed.”

Sounds like sound advise! So this begs to question, what is an Angel fund, or how does one find a private individual interested in granting business venture funds? Of course there are the grant programs, but as mentioned in a previous post, it is with precision the requests are submitted, and there are no guarantees whether or not you will get the grant you’ve requested.

If you are interested in reading this article in Entrepreneur regarding Ventures capital, go to the link at the top of this post. I’ll continue this further as I gain more about angel funding.

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Angel Funds

So, I went back to the magazine, and viola’ there’s Angel finding information. Whoever said there’s not reliable information on the Internet? Click the link above to read about Angel Fund Networks.

Question is...am I brave enough to ask for money? Cheesy question? Are you brave enough?

Here's a link to register for Angel Funding: