Venture Capital funds - which entrepreneurs are they looking for?

Service Business

Venture Capital Fund as an opportunity for few entrepreneurs

Venture Capital funds are a great opportunity for budding entrepreneurs to develop their own business project. In practice, receiving a grant is not an easy task. It turns out that only 1% of those interested have a chance to apply for financial support for their business. The lack of proper preparation for the first meeting with the investor has a significant influence on this form of things. Little experience, stress, focusing on factors unimportant from the point of view of our interlocutor, lack of ideas for further development prospects, and even on the contrary - a large number of ideas and enthusiasm, but without the ability to sell your knowledge in an accessible way. It is the mistakes made by inexperienced - albeit ambitious - business owners that are the main reason for failure after the initial conversation with the investor. This is not the only reason, as Venture Capital funds have strict conditions that must be met when applying for financial support.

Who Can Get Support from Venture Capital Funds?

Applying for capital for business development does not have to mean starting a business. Co-financing may be granted to enterprises at the seed stage - the so-called "seed", starting development - a concept established in business awareness, i.e. "start-up", and even those that have a bit more experience - "later-stage venture". Therefore, it is not necessary to be a young, innovative company that has the slightest chance of a debut on the stock exchange or the issue of bonds. It should be emphasized, however, that it is the "start-ups" that have the best chance of becoming a Venture Capital fund.

Benefits of receiving a Venture Capital fund

Entrepreneurs who received support from the Venture Capital fund can implement risky - as they are just developing - projects, without additional requirements related to financial security. The proceeds received increase the company's share capital without the need to increase costs. Consequently, it has a positive impact on the financial capacity and access to other sources of financing. Developing enterprises can also benefit by acquiring know-how, i.e. knowledge on management and value creation, experience and a network of business contacts - especially the latter factor guarantees further development when looking for new partners. One should not forget about the freedom of action - despite the support from the Venture Capital fund, entrepreneurs - having already gained trust - can usually act according to their own vision and ideas.

Venture Capital funds do not offer anything for free

In order to receive support from a Venture Capital fund, certain conditions must be met. You should be aware that we do not receive funding for free. As a rule, investors expect a return on invested capital at the level of 35-40% per annum. For this reason, only a few companies can ultimately receive the necessary capital. If a company is innovative, has an advantage over the competition, a unique product or service, and has a significant growth potential in a short time, its chances clearly increase.

As shown by the projects so far, companies from the telecommunications, e-commerce, biotechnology, modern medicine and IT projects have the greatest chances. It is worth bearing in mind because certain Venture Capital funds specialize only in selected industries. Experience, enthusiasm, competences and knowledge of the market also have a significant impact on the positive consideration of our application. It must be proved that the presented business plan not only looked nice on paper, but is also able to generate real profits.

You should also remember about such a factor as the flexibility of exit from the investment. In the event of termination of cooperation, the sale of shares or stocks to another investor through the stock market or a management buyout may be considered. If we take into account the above aspects, our chances of acquiring a Venture Capital fund have a chance to increase significantly. Hard work, self-confidence and endless enthusiasm will always remain the key element - after all, even giants such as Google or Facebook used Venture Capital. So who said I would also fail?