Finding Venture Capital For A Startup Business
Be Prepared
Venture capitalists are entrepreneurs. Theyre willing to take reasonable risks for a business, but before they do that, they need to see that youre completely devoted to the success of the project. Professionalism is a requirement with them, not an option. You need to prove to them that youre taking the project seriously and to do that, youll need to put your convictions in writing with a business plan.
Venture capitalists are not generally as soft-hearted as angel investors. They wont like it if you waste their time. Never submit to them a less than stellar copy of your business plan. It must be polished to the hilt, clearly and concisely written, and it must be convincing at all costs.
Make sure your presentation is just as polished. You should have your presentation ready at least one month before your appointment with a venture capitalist. Invite friends and colleagues, hopefully those who are qualified to give you constructive criticism, to listen to your presentation so that youll get used to making the presentation. Encourage them to ask questions and take note of how you answer them. The same questions could come up later on from your future business partners.
Be Confident
Venture capitalists are more likely to listen to and be impressed with what you have to say if you act and speak confidently. You are not proposing your business for no reason, are you? You believe in it, dont you? If so, speak and act like it.
Be prepared for their questions. They arent just going to take your words at face value and hand over millions of dollars without asking anything. Theyre going to fire one tough question after another and you have to be prepared for it.
Be Fair
No venture capitalist would risk their money for your business if youre not prepared to offer reasonable terms and conditions for your proposed partnership. True enough, youll be doing most of the work but theyll also be putting up most of the money. Venture capitalists will find your proposal more attractive if you acknowledge the value of their contribution.
Ask Around
If youve got all the documents ready then its time to start looking for potential venture capitalists! Unfortunately, theyre not something that you can look up in an online or telephone directory so youll have to do it the old-fashioned way and ask around.
When asking for possible venture capitalists to contact, make sure youre discreet and you dont come off as arrogant or desperate. Use your network to scour them out but dont let everything out in the bag; just give a hint here and there about what you intend to propose and venture capitalists will come sniffing sooner or later.
Be Sure
Now, if you and your future business partner have come to terms, make sure that you read the resulting contract several times before signing anything. Better yet, have your lawyer double check the fine print. This isnt a matter of trust but simply a wise precaution any sensible businessman would take. If nothings amiss then congratulations! Youve got venture capital for your business.
Tips for Finding Loans for Your Business Startup
You'll need to be a very creative and resourceful entrepreneur indeed if you want to start a business with no funding. Although there are a few businesses that you can realistically put up with little or no money, most opportunities do require that you have startup funding at least. One of the best ways to do this is through a loan. But where to find one and how? Here are ways you can use:
Prepare a business plan.
A loan is something that only serious entrepreneurs should look into. Make sure you have a solid business plan ready. Most lenders will probably ask you for one during the application process.
Decide on how much you need.
Your business plan should include an estimate of your capital needs and expense. This should give you an idea of where to start to look for a business startup loan.
Look for possible sources of loans.
If you need money for a business startup, don't just go and jump at the very first opportunity to get a loan. Many times, it might not even be a good opportunity for you. Consider first how much you need, what you can offer in return (in case a collateral is required), how much the interest will be and how soon you'll be able to repay it.
Then, make a list of the sources of loans you can tap. These can include:
Banks
Entrepreneurs have traditionally approached banks when they needed loans for their businesses. Other than investing, offering loans at an interest is actually the bank's way of earning money. If your small business startup needs a loan, a bank is a good place to start.
What you can expect: your banker should be able to assist you in finding the right loan for your business startup. Ask if loans are underwritten at the local level. It will be easier for you to obtain and negotiate for one.
Look for small business loans as well. Not every loan type a bank offers may fit your needs and capability. Besides, a bank that already provides loans for business startups will be more capable of and experienced in handling your unique requirements better.
Small business agencies
Small business agencies are excellent sources of much-needed funding through a business startup loan. These companies often specialize in venture financing so they are more likely to understand your needs. You could also choose from different loan types depending on the amount of money you need.
If your loan is less than $150,000, for example, you're better off looking for lenders that offer small business loans at a good interest. For larger loans, you might want to look at other loan plans or if necessary, lenders.
There are also loans you can tap for small funding. The MicroLoan Program, for example, lends business owners startup money of $35,000 or less. They are easy to apply for and are excellent in case you need funding to purchase supplies or just for working capital. On the downside, these loans are short-term, so you'll have to repay the loan amount plus capital within a short period of time.
If your business startup involves short-term work, such as those that are seasonal, cyclical or short-term based, you might consider obtaining special loans designed specifically for your type of business. These loans are perfect for ventures that involve building or construction and could offer you as much as $750,000 in startup loans.
These are just a few of the types of loans you can expect to find in the market. Make sure you fully understand the responsibilities they entail and that you get the right type of loan for your business needs. Choose wisely because a lot of your success as a business owner depends on how you manage the money from these loans.
Personal loans.
Depending on the circumstances, you could tap personal loans as the first or last resort when you're looking for business startup funding. Personal loans can be tricky but if you have a good source, establish a fair agreement and return the money as agreed, it could help give you much-needed money for your business.
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