Financial provision made for start-ups, existing, or troubled businesses with growth potentials is called venture capital. This financial capital is usually provided by investors who will take equity of the business which the capital is provided for. Or it could serve as a loan giving for the sole intent of starting, or rescuing a venture. Small businesses with no capital base to meet their targets, or existing ones with financial problems, who cannot borrow from banks to keep their business look up to venture capitals.
The decision of starting Venture capital should be influenced by things likes:-
- Available fund
- Growth potential of a venture
- Waiting attitude
To begin with fund, venture capital requires a huge sum, since it entails investing in one or multiple businesses at a time. Therefore, the process of fund raising should be a primary step.
Raise Fund Towards Starting
The difficulty in raising fund for venture capital could not be undermined. This is because, beginners don't find it easy getting fund from outside, and that may require that you use your own money, or raise fund through family and friends. It may take the long run, (when the firm has made some investments) for external creditors to consider it worthy to be funded.
Analyze The Activities
Venture capital involves a lot of activities, which require careful analysis to ascertain. For instance, the potential growth of every business to be invested in, the risk of providing capital for a troubled business, and the decision to invest, are among the long shots to call based on analysis.
Plan Using The Data Derived From Analysis
The data derived from analysis will enable better planning. Your source of fund would be interested in return on investment, and how you would cope with loss. Therefore, make a to-do list that will cover the start-up, and the long run process. Planning also involves choosing what to invest in. Some venture capitals invest, or give loan to all types of businesses while others are specific. For instance, your interest may be in technology alone while others will be investing in agriculture, industry, whatever they feel could bring in gain. The point is: planing enables your objective.
Hire Venture Capitalists
Venture capital has been known for job creation, but your objective isn't to provide job, of course, it is to build a firm that would employ people who will keep it business. Therefore, hire people who have knowledge of the business, or proactive entrepreneurs who have what it takes to effect a positive change.
Publicize and Advertise
Now you have to let people know by advertizing your firm using various means of media. The objective here is to bring in people who have businesses, those looking for loan, and those who need a bail out. Keep it strictly to what you planned to invest in.
Weigh And Negotiate The Deal
What will keep you in business is scrutiny, knowing where to put the capital, I mean the business which is worth going with, and that, which doesn't deserve a dime. when dealing with proposals, allow open communication from members of your work force and potential clients. Keep every executed deal legally documented.
Reevaluate Your Operation
The consistency of change keeps taking effect on everything, and for that reason, you need to periodically evaluate your whole system of operation. Giving review to every little thing. That will keep you up to date with the advancement of businesses.
This post will continue to be updated until we meet the desired information to cover every aspects of venture capitals