Just how that Venture Capital (VC) firms invest implies that merely a certain form of business is suitable to allow them to invest in. The theory goes similar to this, most VC investments fail, but the ones that do succeed cover the expenses of the failures and provide a healthy return. To use the boxing analogy VCs throw haymakers. Most businesses do not have the potential to generate the level of return required for the VC investment methodology. As an initial time entrepreneur, you'll need to begin slow and build from the underside up. Initially seeking VC funding is really a bad idea generally in most cases. The chances of a trustworthy VC firm investing in a team of very first time entrepreneurs are extremely slim.
A much better idea is to develop your business and seek a Business Angel if you need additional funding. The best Business Angel will really enhance your business. The Business Angel will soon be invaluable in increasing your revenues, and hence, improving your chances you will produce a profitable exit. If your business does require further VC funding to scale, then having a successful Business Angel on your own team is crucial.
It's important to consider that the procedure of getting VC funding is expensive (for bootstrap entrepreneurs like us). You will have to purchase due diligence as well as other legal and accounting fees. To put this in context, if you are smart, you will have to get personal legal services which can be separate to the legal services for your business and you will have to purchase both. Together with this Top Venture Capital firms, you are at a significant disadvantage when undertaking negotiations with VCs. They try this all the time, and you are only going right on through this process for the very first time. Having a skilled Business Angel leading your side in the negotiations will greatly enhance your position.
Traction is the currency of private equity investment, both on Business Angel and VC levels. Accumulating traction is definitely an excellent idea. As a result, you'll need not get worried with VC or Business Angel funding provided that you are pursuing traction with all of your might. View it similar to this, investors look at your business as a money machine. It's your decision to function as engineer who builds that money machine. The more traction you've the higher your negotiating position.
Getting funding should not be the key focus of one's business. Making a gain should be. Should you choose this, then any funding to assist you scale can come naturally. However, it's difficult to bootstrap a business to the investment ready stage. These top 10 tips for business start-ups could help you across the way. It's plenty of work but when you persist you will dsicover the huge benefits and reap the rewards.