Venture Capital, is it right for you?
First a short definition of venture capital. Venture capital is often viewed by the entrepreneur as a high interest loan. This isn’t really the case. Venture capital is just money made available to you for starting your business, in exchange for ownership in the company. In most cases the VC firm will also offer you management advice and guidance. It is also sometimes referred to as “angel financing” a term you’ll find laughable if you do business with the wrong firm.
The way it works is you approach a venture capital firm and pitch your idea to them. It doesn’t have to be a business you are starting, it can also be a business you are trying to buy .
The firm will usually have a board of seven to ten people meet with you and discuss your idea. Then they make a recommendation to the full firm, or a segment of a larger venture capital firm, and decide if they should give you the money.
Most of the cases I’ve seen the firm retains 40% ownership if you pay them what they demand every month. If you fall short a couple of payments they take 60% control of the company and you get 40%.
Venture Capital – Is It The Best Way To Go, Or The Worst? | Find Investors
