| ng business finance isn't always easy, and especially | | | | Don't Be Too Scared Of Equity Dilution |
| so when you've not got enough assets to secure | | | | Many a business has failed because the management |
| against your ambitious plans. In some cases, you're | | | | have been too afraid of diluting equity. While it's |
| going to have to part with equity. Venture capital | | | | important to ensure you treat your equity with the |
| funding can help you grow your business, and plays a | | | | respect it deserves, you shouldn't be afraid to let go |
| vital role in fuelling growth and innovation in the world | | | | of some if it's going to mean you own a smaller |
| economy. | | | | share of a bigger business. Using venture capital you |
| Venture capital has helped to fuel the growth of | | | | can explore a high risk, high reward, rapid growth |
| some of the world's biggest public companies at one | | | | strategy. In many cases VC firms will be happy to |
| stage in their life-cycle. Venture capitalists are willing | | | | fund your business to run at a loss initially, because |
| to run the risk of making poor returns, or losing all of | | | | they can see the bigger picture. This is a luxury that |
| their money, for a chance to hit a home run. That's | | | | you will not be able to take advantage of when you |
| why their capital tends to follow big ideas, and is hard | | | | have bank managers looking at your ever dwindling |
| to get when you're looking to do something that isn't | | | | balance sheet. |
| too innovative with huge growth potential. | | | | Raising equity also gives you an opportunity to profit |
| The Dynamics of Venture Capital Funds | | | | from your businesses success, or idea, before you |
| When entrepreneurs are looking to raise money from | | | | manage to take dividends or experience a liquidity |
| venture capitalists, they often have a poor | | | | event. Although it will probably only be offered in |
| understanding of how the market works. Venture | | | | later rounds, a VC firm might be prepared to buy |
| capital firms do not raise their funds from | | | | equity from you directly as well as buying it from the |
| shareholders; they usually raise their funds from | | | | company. |
| private institutions. They will then charge a | | | | Choosing The Right Venture Capital Firm For You |
| management fee, and take a percentage of equity | | | | Working with a company that's worked in your space |
| for themselves. They also have a tendency to work | | | | before can be of tremendous benefit. They will have |
| together - often they will have other firms invest in a | | | | domain knowledge to share, and will often have the |
| deal along with them. This can be to limit their | | | | right contacts in their phone book for closing |
| exposure, and bring in expertise. Some VC firms will | | | | partnerships and recruiting expertise. The relationship |
| take an active role in managing their investments, | | | | that you have with your VC could make or break |
| while others prefer to watch carefully on the | | | | your success, so make sure you pick the right one |
| sidelines. | | | | and the best fit for your business. |