It is a great time to raise money for business opportunities in America. In fact, U.S. companies are on a pace to crack the $100 billion mark for venture funding for the second straight year. However, the presence of this money does not guarantee that every business owner will get a piece of it. There are several things business owners should know when thinking about securing venture capital.
Put Mentorship first
when looking for a venture partner, it is important to find one that is right for the stage of growth your company is experiencing. If you are in the beginning stages of your company this will mean a partner who is able to help with the challenge you face of taking a great business idea and bringing a product to market. Sometimes more than money and advice will be needed. The perfect venture partner will get in the trenches with you from time to time and lead by example.
The relationship between you and your venture partner will not be a short one. When you are vetting potential partners, you should ask yourself if each of you will fit the needs of the other for at least a decade. Ask investors that interest you what their approach to potential speed bumps for your business will be. You will need someone who will be willing to provide encouragement while challenging and inspiring you past inevitable obstacles.
Ask The Right Questions
There are a number of things you should know before entering a venture agreement. Important questions to ask yourself include:
- How will outside capital help my business? – If venture funding will not elevate your companies in ways that you cannot without the money, it may not be the right decision for your business at this time.
- Am I prepared to relinquish partial control of my company? – Accepting money from a venture capitalist comes with obligations. A VC intends to help you along your path to business success but will also hold you accountable.
- Is this the right investor for your company? – Your company will be married to the venture capitalist you choose for a decade or so. It is imperative you choose the right investor.
Venture capitalists will be more willing to provide funding for your company in the pre-product stages if you have already demonstrated the ability to launch similar products in your past job or business experiences. If this is not the case, it may be better to seek funding after you have a product that demonstrates traction in the market.
In today’s business climate, there is perhaps more venture capital available to business owners than ever in the past. However, this money does not come free and is not without risk. There are a number of points to keep in mind when figuring out whether or not venture capital is right for you and your business.