Venture capital funding provides effective capital for the growth of your company.
Venture capital funding can be an excellent source of financing for the right business. It is certainly not for every business, but can really help provide the right boost to a business that is in need of capital. To determine if venture capital funding is right for you it is best to ask yourself several questions about your business before deciding to proceed with obtaining venture capital. The venture capital investors are looking to make a large profit from your company, so they have strict criteria when deciding what companies to proceed with their investment.
The main things to consider before seeking venture capital funding are:
- Does your business have a new, unique product or service that targets a large group of people?
- Can your business compete and become a leader against the top companies in your market?
- Does your business need between $500,000 and $5 million to operate and get your product to market?
- Is it easy to get the public to notice your unique product or service?
- Will your product or service require tons of customer support? The less customer support needed, the better chance you have of obtaining funding.
- Can your product or service generate gross margins greater than 50%?
- Is your management team knowledgeable about the new product and service, and do they have prior successful business experience?
- Can your business achieve gross annual revenues of $25 million in 3 years if the necessary venture capital funding is provided?
It is extremely important to answer, “Yes”, to that last question before attempting to achieve venture capital funding. The investors want to invest and make a huge profit on their investment, so if you can’t prove with your business plan that your unique product or service will make $25 million in 3 years, it is best to pursue other business financing options such as small business loans. Use our business capital search engine to find lenders for your business.