How to Get Business Financing From Venture Capitalists

Many entrepreneurs struggle to secure financing for their business. They have a great idea but encounter financial handicap when it comes to implementing their plan. It can be frustrating not having the funds you need to pursue a great business idea. If you find yourself unable to raise money to start your business, you need to look into financing provided by venture capital firms. These firms provide start-up capital in exchange for share in profits or ownership in the company. It is important to keep in mind that venture capital firms receive hundreds of requests each year so you must be able to convince them that your idea is viable.

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There are several ways to approach a venture capitalist and some are more effective than others. You need to do your homework and use a well-planned and proven approach in order to get their attention. Venture capitalists have hundreds of potential clients to work with, and are very busy so you need to contact them in a professional manner. To increase your chances of success, try to get personally introduced to the venture capitalist by a company executive who already has business dealing with a venture capitalist. You can also get introduced by a lawyer or an accountant. This approach works better than blindly pitching them with your proposal or offer.

Make sure you are thoroughly familiar with your product or business. You should be able to describe your business or product in an easy to understand manner. Even though venture capitalists are usually intelligent, you can get them confuse if you use jargon and acronyms in explaining or describing your product to them. Make it easy to understand what your product is all about and the benefits it provides.

Create an impressive business plan. When looking for a venture capitalist you must prepare a solid business plan. Having a business plan is not optional, but a requirement. Before you start approaching venture capitalists , be sure you have a carefully crafted business plan that includes profit and overhead projections.

Once you have made contact with a venture capital firm, send them an executive summary, which is a document that specifies the important aspects of the project. An executive summary is usually one or two pages long, and can be sent by email.

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After you have contacted a venture capitalist to work with you need to negotiate. Do not take this step lightly. Keep in mind that venture capitalists are businesspeople and they want to make money. They will want a huge share of your business. That’s why negotiation has to be done carefully and reach an agreeable deal that makes all parties happy. You don’t want to give up ownership of your whole business and future to them. They will try to take possession of as much control and ownership of your business as possible. So get your lawyer involves and make sure you negotiate a good deal that allows you to retain full control of the direction of your project. A good will make sure that you retain an ownership stake and full control of your business.

Peter

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