Venture Capital

The book I read to research this post was Venture Capital For Dummies by Nicole Granagna which is an excellent book which I read at

http://safaribooksonline.com

Some companies like ie Apple Computers have grown exponentially through venture capital funding in their early days of business. The idea behind venture capital is someone invests in the company in exchange for a portion of the business and the company can grow quickly as a result and then be sold at a profit or go public on the stockexchange. The venture capitalist will normally get a seat on the board and may be a useful advisor particularly if like a lot of these people he specializes in investing in that type of business. He may also be able to suggest other people who can hire as advisors. You normally will have to approach quite a lot of venture capitalists before you find one that will invest. Many don't invest their own money and you should see a red light if he asks for an exclusivetey clause. There are a couple of useful social media sites at http://angel.co & http://www.gust.com that specialize in putting you in touch with venture capitalists. These sort of sites are often free to entrepreneurs. There is also sites like linkedin & facebook which may be of help. Many bosses are put off the idea of venture capital because of the idea of going into debt and giving up a share of the company. It's not for everyone. Most businesses a venture capitalist invests in won't make but it's outweighed by the businesses that do. A potential business will only have a small group of investors who each have invested a substantial amount and won't have any investors who negotiated stranglehold terms. The best companies are often ones that manufacture something on cutting edge technology.It should also generate substantial mark up for the company. This is a very interesting book which looks at this topic realistically and I must admit I personally won't be using venture capital as although I am self employed I am a small company and this works best on a large scale.