CARTOONS BY CHRIS BRITT

– VENTURE CAPITAL –
Venture capitalists target startups and small businesses that appear to have long-term
growth potential using equity based funding models. The dollar amounts are usually
larger than those of angel
investments, but venture
capitalists aren’t in it for
the long haul; it’s a short
term venture with an
exit strategy on the back
side. Venture capitalists
typically enter the picture
after a company is already
started (high tech seems
to be an exception) and
has a proven concept and
initial revenues.
You have to think big to be big.
HOW DOES IT WORK?
Venture capitalists invest in terms of millions of dollars. Their niche is proven
businesses or high growth startups that have potential to be sold or go public. This is
important to note as you are considering this type of financing for your business. You will
need to prepare a pitch and be ready to hear the word “no” a lot. This is not meant to
discourage you from seeking this type of funding, but you do need to be realistic not only
about the chance for success but the ultimate direction a venture capital firm wants to
take you, which is to an exit strategy. For the right business, however, these funds and the
advice that comes with it can be invaluable to their success.
Remember, venture capital firms are trying to protect their investment. They are
willing to take the risk now for the larger return down the road. They may want to fund
your business in rounds, meaning that you must reach specific milestones in order
31