Before you go out and start raising money, there are a few things you need to know:
Venture capitalists don’t want to hear about ideas; they want to see your company launched before you ask them for money. If you weren’t willing to put the time and money into launching a beta version of your company, why would they want to give you money?
As a venture capital investment manager, opportunities land on my desk all the time, time is precious, I cannot be “All to Everyone”, and more importantly, if I choose to invest my time and resources into an opportunity with mediocre returns, I will forego other, more lucrative opportunities, something we term as “opportunity cost”.
With increasing coverage and interest in startups, fundraising and venture capital, many terms have become more ambiguous than ever. That can leave entrepreneurs pretty foggy on how they should really be approaching raising money. So, who is funding what? Why does it matter so much if you are launching or trying to scale a venture?
A venture capitalist invests in early to mid-stage companies and startups with the goal of scaling that business and producing a high return on the investment. The biggest risk for venture capital investors is that an investment will flop or even fall into bankruptcy.
When you want to start a business you must have some money to pay the necessary items needed such as office equipments , deposits and stocks and this is called a startup capital. If you have insufficient fund, then you may approach a firm or any investor who is willing to pump-in their money into your start-up business and this fund is called venture capital.
If you are planning to establish your own startup, one of the first things that you have to do is to secure financial support. One way to do it is to apply for a bank loan. Another – and the more popular one – is to seek support from venture capitalists.
Definition – – Venture capital (VC) is funding invested, or available for investment, in an enterprise that offers the probability of profit along with the possibility of loss. Indeed, venture capital was once known also as risk capital, but that term has fallen out of usage, probably because investors don’t like to see the words “risk” and “capital” in close conjunction. Venture capitalists often don’t tend to think that their investments involve an element of risk, but are assured a successful return by virtue of the investor’s knowledge and business sense. DataMerge, a financial information provider, says that VC investments in an enterprise are usually between $500,000 and $5 million, and that the investor is likely to expect an annual return of 20% to 50%.