What You Should Know When Looking for a Venture Capitalist
The venture capitalists in our midst have truly helped a lot of start-ups that would have otherwise gone to the ground without their help. The financial institutions are of no help where a start-up is involved because such business cannot prove that they can repay the loans as yet. What a venture capitalist does however, is not just to offer up the money but also to offer guidance and mentorship which sees a start-up become a success story. Offering up a company on the IPO or liquidating their stock positions are the major ways that a venture capitalist can get back their investment if they decide to call it a day at your company. It is however not that easy to find a venture capitalist who is keen on the niche you are in. See below some factors to consider when looking for a venture capitalist.
It is very critical for one to carry out some research. You shall have to set up your company’s goals, this being both the short term and the long term goals ,and you shall also have to look critically at the goals of the investment that is being offered to you in return. Also look at your business to see if you can handle being in an IPO. Make sure you have understood what the merger will bring to the table for both you and the venture capitalist.
You shall have to think about the cost of having a venture capitalist take up shares in your business. Ensure you have understood the repayment process and expected repayment amounts that have been presented to you by the venture capitalist. Check that you shall still be in charge of the company’s finances even after the merger. Ask after the requirements of the board of directors. It is very important for you to be in the same wavelength with the venture capitalist when it comes to finances otherwise the whole funding may not be worth the price in the end.
Something else to think about is the venture capitalist’s reputation. Find reviews and feedback from other business that have benefitted from such a merger. Learning more about this will help you predict the future of your company. Otherwise all there may be is doubt and uncertainities.
A venture capitalist who has quite some understanding of the niche you are in is the best to work with. The expertise and experience that they have is very crucial and thus very effective for your start-up. For you and your company to get as much as possible from such a merger, you shall need to find a venture capitalist who is not only armed with the finances but with the skill and knowledge in the niche as well.