Venture Capitalists for Your Small Business Financing?
A Home Business Article Contributed by Elizabeth Fox-Wise
Are Venture Capitalists a Good Place to Look for Small Business Financing?
Typically, a venture capitalist is not where most people will start out when looking for small business financing, and many may never look there. There is a good reason for this.
Most small business owners are not starting the type of small business that venture capitalists are interested in financing.
Venture capitalists are typically looking to invest a large amount of money for a short amount of time. They are generally looking to provide millions of dollars, ($5 million and up) Most small business is not looking for financing of this magnitude.
They want to finance businesses with huge growth rates, in high growth industries. Typically they invest in industries that are high tech as well as high growth. They want to provide financing for a business with excellent management teams and proven track records.
Additionally, there are not many venture capital firms in the country so the opportunity is not widely available.
What to Do If You Do Want Venture Capitalist Financing for You Small Business
All of that said, if you do have a sound small business idea in a high tech high growth industry with great growth rate that needs this type of financing, there are things you should do to prepare for approaching a venture capitalist.
Take another look at your business plan. Polish it and revise it to talk to your target market. Your business plan needs to convince the venture capitalist that they want to invest their money into your small business, make sure it is the best it can be.
Develop your summaries. Summaries are critical if you are seeking venture capitalist financing for your small business. It is not appropriate to send your business plan to a venture capitalist until you have been invited to do so. First you must send summaries to generate interest. Your summary should be an intriguing business plan summary and a brief note explaining growth, industry and potential. Just enough information to spark interest and make the venture capitalist want to review your business plan.
Select the Venture Capitalist You Approach for Small Business Financing Carefully
Do not start mailing your summaries to any venture capitalist that you can locate. Instead, you will be much better off if you research any Venture Capitalists that you can located to determine which would be your greatest chance at getting financing for your small business.
When doing your research your are seeking a venture capitalist who has a history of financing business similar to your own. Pay attention to the typical amount of financed, into which industries, and geographic areas. Find the venture capitalist who's financing history matches closest with your small business financing needs.
Once you have located a Venture Capitalist to approach, you should contact the office and find out how they wish you to submit your plan to them. Most will have a particular style that they prefer to work with (email, postal mail, phone, etc). They have what you are looking for and your chances of your small business obtaining financing from them is greatly improved if you play by their rules.
