Venture capital companies make money when a business they have invested in is successful. They provide an excellent additional source of working capital for any business known as venture capital. In order to make sure they can maximize the amount returned on their investment, venture capital companies have strict criteria for businesses that they choose to invest in.
Your business is an excellent candidate for venture capital if you have a new, unique product or service coupled with a strong, successful management team. Venture capital companies want to also make sure that you can make a profit margin of at least 50% on the unique product or service, because they want a high return on their investment. Their investments typically range between $500,000 and $5 million or more. They will invest in a start-up company and a company that is need of growth capital.
To go along with their monetary investment venture capital companies will provide consulting and guidance from successful businessman. They help guide you and your management team, so your business reaches it’s financial goals as fast as possible. Venture capital companies want to see that your business is worth $50 million to $100 million after 10 years or so of their investment. They will provide the resources you need to get to that goal as fast as possible. They are taking a risk with your company. They will often finance businesses that have a risky business plan that banks won’t even consider for financing.
Not all businesses qualify for financing from venture capital companies. There are other options for working capital including small business loans, unsecured lines of credit, and more. All of these options can be found in our free business capital search engine.