You might have a startup or even a small business that has got off the ground. You might have the skills and experience, the team and enthusiasm to take it to the next level. But all that could come to naught if you don’t get your financing strategy right.
From the first spark of an idea to setting up a business and making it grow, at various points of the journey, an entrepreneur will consider venture capital funding for his startup to thrive, scale, and go farther, faster. But the process can be daunting for a newbie entrepreneur.
Whom to take money from, when to raise money, what should be the terms? Is the business fundable in the first place? There are many questions to answer, but if you tackle them before going off on a hunt for venture capital, you will save time and improve your chances. This is where VENTURE CAPITAL FUNDING (VCs) come in.
There are thousands of venture capital funds out there now, looking for unique startups to fund. But most startups won’t even get a chance to make a pitch to a sought-after investor. Your best bet is to be as well prepared as you can be, and this will help you get you started.
First things first: what is venture capital funding?
Pension funds, insurance companies, and wealthy individuals invest in real estate, stocks, and other assets. They allocate around 10 percent of their money into riskier investments with higher returns, a.k.a. startups. They channel those investments through venture capital funds, mostly.
Now that we have seen how venture capital works, we can take up what it takes for an entrepreneur to land venture capital funding. What are the basic questions an entrepreneur needs to ask himself/herself before taking that path?
These are questions an entrepreneur needs to ask himself before going off in a quest for venture capital funding.
- Do you have a viable, rapid-growth, highly-scalable idea?
- Does your business suit the venture capital model?
- What is the size of the market that your startup is targeting?
- Deep down, what is your reason for starting up?
- Are you ready to share control of your startup?
- Which is venture capital fund right for you?
- Do you have the boldness and perseverance to cross the dark valley?
- Do you have the team and leadership to grow your startup into a viable business?
With so many startups clamoring for venture capital funding, it’s the ones that get VCs to respond emotionally, and not just analytically, that are more likely to make the cut.
The startup journey can be as exciting as it is fraught with risk. Paying attention to what goes on there can prevent sleepless nights and take you soaring into your dreamland.
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