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Venture Capital

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Venture Capital

Despite all of the attention venture capital firms get in the business press, they actually finance very few businesses. The better venture capital firms are deluged with proposals from budding entrepreneurs. But most of these entrepreneurial proposals are inappropriate to the goals of venture capitalists.

Most venture capitalists concentrate their financing efforts on later-stage business funding. Some venture capital firms will, however, consider financing a start-up. What they want to see from any entrepreneur seeking funding is a history of start-up successes under the applicant's belt. They are best known for financing high-tech firms, but they do finance other types of businesses over 50 percent non-high-tech businesses for some venture capitalists.

Venture capital firms prefer to cut deals that provide an exit path within five years. They view the probability, or not, that a firm will be successful enough to go public or be purchased by a larger company. They also expect very high returns for their investment risk that only the fast pace of highly profitable growth will bring. They want to see a management team in place that can handle rapid growth. And they want that management team to be well balanced with all types of experience and skill represented creative, engineering, financial, marketing, and management.

* Source Streetwise Small Business Start-Up

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