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Remember that venture capital firms tend to focus on a particular industry. With their stake in your company, you have access to all of the venture capital firm’s information and guidance. In fact, most venture capitalists will at least require being on your Board of Directors. These investors have the same goals as you, to grow a successful [url=http://www.re-tek.co.uk/abercrombie.html]abercrombie and fitch[/url] business and exit. Therefore their partial ownership in your company does not harm you.
If you’re looking for business plan help, then consider using a simple business plan template, so you finish your plan in hours, not days, weeks or months.
Deciding to raise capital for your business is a major decision with whether to use debt, or selecting equity financing. Venture capital falls within the parameters of equity financing, which is a much different type of financing than debt capital. Debt is the financing found most commonly in a bank loan from a lending institution.
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Remember when raising equity capital, this ultimately means that part of the company is being sold. It is a swap of partial [url=http://www.achbanker.com/home.php]hollister france[/url] ownership in return for funding. What this means in the long run is that if the company does get acquired in a few years, the venture capitalist receives a portion of the profits.
This might seem intimidating for some companies, but don’t worry. The investors know a small piece of a large company is better than owning the entire smaller sized company. As an example, 10% of a ten million dollar company is worth twice that of someone who own 100% of a $500,000 business.
Remember, venture capital firms tend to have particular industries as a focus. Once they have a stake in a company, there is access to the financing firm’s guidance and business information. Many venture capitalists will require that they have a place on the Board of Directors. The investors have the same goals as the entrepreneur: to grow a successful business and then exit. Partial ownership, therefore, is not a negative when negotiating.
Venture capitalists can bring a lot of money to invest. If a firm is promising to grow, the investor can offer significant dollars that will help expand the business to larger goals. Most venture capitalists already have the tools and networking in place [url=http://www.rivaluta.it/hot/hogan.asp]outlet hogan[/url] that will help spark this growth more than a small business going solo.
Raising venture capital allows the entrepreneur to focus on growing the business without worry about the short [url=http://www.1855sacramento.com/peuterey.php]peuterey outlet[/url] term payable expenses. Venture capital means there are no interest or principal payments to make. Debt capital does require payments for the loans. For companies that are still young and haven’t generated enough revenue and are still in the growth focus stage, this can make the difference in success or failure.
In addition, raising equity capital, [url=http://www.1855sacramento.com/woolrich.php]woolrich bologna[/url] in principle, means that you’re selling a portion of your company. Thus, you’re giving up ownership in return for funding. Ultimately this means that if your company does get acquired, you will have to share the proceeds accordingly with the venture capitalist.
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