Venture capital firms provide valuable working capital for the right business.
Venture capital firms invest money into fast growing companies that often have a unique product or service that is in demand. They expect to make a high return on their large investments into a business, and therefore have strict criteria in place for choosing businesses to invest in.
One of the first areas venture capital firms look at before investing is the product or service of the company seeking capital. They want to make sure the product or service is original and that there is a good market demand for it. Another important factor they consider is the ease to the market of the product. That means how will the product be sold, who will sell the product, is brand awareness required to sell this product, etc.
The amount of customer support required to teach the public how to use your product is another important factor that venture capitalist consider before funding a venture. They want to make sure it won’t cost millions of dollars to teach the public how to use the product.
Having strong, experienced management with proven records of business success will go along way in helping your business secure venture capital funding. The VC investors want to make sure your management can wisely and efficiently manage the money provided through their investment.
Another key factor in determining whether your business is worthy of venture capital is the competition in the market of your particular product. Venture capital firms don’t want to invest in a business that would have a difficult time carving out a significant market share. They want to make sure you aren’t competing with large established, Fortune 500 type companies.
Venture capital firms also look at the size of the investment you need to succeed. They typically look to make investments ranging from $500,000 to $5 million or more. If you require less than that, you would want to look into another financing option like a small business bank loan. Browse our free capital search engine to find available capital for your business.