Start-up businesses require funding in order to grow, otherwise known as Equity Financing. A potential option, as a result of this, is venture capital financing, which is also beneficial for investors, who will make a strong percentage of what the company makes. If an investor is interested in a company or an idea from an entrepreneur, in exchange for a high percentage return, they will make a venture capital investment. Sometimes, investors will want a key role when it comes to making decisions for the business too.
Venture capital financing comes from either a Venture Capitalist, which is an individual with a high net worth or a private company investment. The other main type of venture capital financing is known as Venture Capital Fund, which collates funds from various parties.
Obtaining Venture Capital Financing
In order to successfully obtain venture capital financing, your business idea and concept will need to engage the investor and get their attention. The growth plan and ideas must be realistic; investors will want to know the time frame of achieving these goals, as well as your business expertise and overall performance.
Business entrepreneurs tend to make the same mistake when seeking venture capital financing, which is relying on their ideas too much. Investors want to see strategies in place to back up business plans.
The Advantages Of Venture Capital Financing
Before making your informed decision regarding venture capital financing, it’s imperative that you consider both the pros and cons. There are a number of advantages of venture capital financing for businesses. These include:
- A large sum of equity finance can be provided, which wouldn’t usually be possible through conventional methods and bank loans
- Venture capital brings wealth and expertise to the company
- It provides resources, valuable information, as well as technical assistance for a successful business
- The ability for company expansion
- Payment for venture capital financing isn’t always an obligation like a bank loan
- Venture capitalists are usually well connected in the business community, which could benefit the business
The Disadvantages Of Venture Capital Financing
As previously mentioned, it’s important that you take the disadvantages of venture capital financing into consideration too. These include:
- Funding can be scarce and difficult to obtain
- Finding investors can be distracting for founders
- The founder ownership is reduced
- Leverage in negotiations is normally rare for start-up businesses
How Can CSS Partners Help With Venture Capital Financing?
At CSS Partners, we will provide you with enough information to make an informed decision when it comes to venture capital financing. Our team will never push you to make a decision or be biased, we will collect and provide you with the material you need to make your choice. We work hard to help you to make an informed investment decision for your business, whether that is raising alternative investment capital or seeking venture capital financing for your start up business as an entrepreneur.
If you would like to find out more information about our professional service, get in touch with our team to discuss how venture capital financing would benefit your business.
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CSS Partners LLP is registered as a Limited Liability Partnership in England and Wales, No. OC311440. CSS Partners LLP is an appointed representative of Charles Street Securities Europe LLP which is authorised and regulated by the Financial Conduct Authority.
Investment in private companies carries a high risk as well as the potential for high rewards; it is highly speculative and there is no recognised market for these shares. Investors in private companies must have no need for liquidity and must be able to withstand a total loss of investment.
Private equity investments are not suitable for all investors. The CSS Partners private client service is only available to high net worth, sophisticated, self-certified sophisticated and restricted investors only.
The offering of investments is by a separate investment memorandum which supersedes the contents of this web page.