Funding of venture capital provides a major push for the potential growth of your business.
Nevertheless, although it may provide a viable source of financing for your company, it may not be always appropriate in all cases. But should a company genuinely require sound capital funds; this option can offer a major catalyst toward growth.
This type of capital funding requires a level-headed evaluation of the capability of your company to accomplish closely the investors’ objectives in providing the capital.
In short, the major goal of venture capital investors is to gain substantial revenue from their involvement in your firm. Meaning to say, they commonly impose strict standards and require that you fulfill this prior to the loan release.
From our involvements in the past, the conditions of most venture capital lenders often focus on the following considerations:
- Does your company manufacture or market a novel, special product or service that can appeal to a wide social sector?
- Can your newly-capitalized venture actively compete with the top firms in your market niche?
- Will it be an easy task to attract your market target and patronize your unique service or product?
- Can your product or service realize gross margins over 50%?
- Does your product or service require an intensive customer assistant?
- Do you and/or your management staff have comprehensive knowledge and appreciation of the new product or service? Do you, as a group, have past successes in business operations?
- Does your business have the potential of realistically attaining positive gross yearly profits within a period of 3 years as financed by a venture capital investor?
If you can answer affirmatively and confidently to the final question, your need for venture capital will most likely convince the prospective investors. Your investors will surely desire to obtain significant return on investment while the possibility of a loss will be undesirable to them. In case of uncertainty as far as achieving this goal, it would be wise to look for alternative ventures, such as in small business funding.