There are many ways that you can finance your business, but one of the best among them is to seek venture capital. However, this gives rise to one of the most common questions – “What is a venture capitalist?”. In this article, I will try to answer your question about what is a venture capitalist and also point out some really useful tips that you can use to make the venture capital work for you.
The venture capitalist is basically a person or a company, who are willing to take financial risks. Those people are looking to make their investments grow, by investing in innovative ideas. However, you must have really exceptional and promising ideas, to grab the attention of the venture capitalists. Furthermore, they will be looking to get their investments back as soon as possible and if your idea does not work, you will have to return the finance that you have received.
When trying to find our what is a venture capitalist, have in mind that you must really give them your best, because on this depends your chances of getting VC funding. Here are some really useful tips for getting the best from these people:
* It is a good idea to include a term sheet at the end of your business plan. There you should list all the requirements that you have from the investors. However, have in mind that all the venture capitalists will consult with their lawyers, before they accept the terms that you have set. This means that you should not ask them to accept the terms that you are offering them in the first meeting, because that way you will drive them away. Make sure that you are open for negotiation, try to know more about what is a venture capitalist and he can benefot you, because they will very likely negotiate and your knowledge will help.
* Prepare an “Anti-Dilution” clause in the contract that you will offer to the venture investors. Many of them will require that when you receive the first terms of financing, so make sure that you will consult with your management team and include one.
* Use the super preferred stock option, to preserve the voting ability for your team. Most of the venture investors will require full ownership when they are offering you financing, so it is the best way to retain your active participation right in the major company decisions.
The venture capitalists are one of the most common sources to get finance for your company and ideas. However, have in mind that nothing comes for free and you are likely to provide a lot of shares of your company to the investors as a protection. On the other hand if you spend some time and consult with some of the best financial experts available online, you will easily learn what is a venture capitalist and how to get the financing from him, while still continuing managing your business. Due to the improvement of modern technologies, the internet offers a lot of information about VC funding, so it is a good idea to research there and read all you can find.
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