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What You Can Expect From a Venture Capital Firm

Feb 6, 2008
What should you expect when you approach a venture capital firm for a loan? How about if you are approaching them for investment purposes? This article will attempt to cover both aspects of what you can expect from a venture capital firm, and how to get the most out of the ones you will encounter. First of all, what is a venture capital firm? They are also referred to as private equity investors. A venture capital firm is a company that handles investments from several individuals by using their money to invest in up and coming small businesses that need money to get going. They have lots of experience when it comes to this, so listen up if you want info on how to take advantage of their services.

Firstly, you need to know how to prepare yourself for approaching a venture capital firm. If you are an investor looking to get help with your investments from a venture capital firm, then the first thing you need to get ready is how much money you would like to invest with their company. If you have other investments, decide how much of your total investment money you would like to put at risk with this type of venture. You should go into the meeting knowing up front that it will be very risky. As usual however, the bigger the risk, the higher the pay out is. The money they invest is going into other small businesses, so your return is largely dependant upon the success of those small business owners. If their business goes under, unfortunately, so does all of your money.

How can you benefit from a venture capital firm as an investor? Here is what you should ask when you go into a meeting. Tell them you'd like to take a look at their portfolio of businesses, and do some research on each of them. Call each individual business if you have to in order to get more information about what they plan. They are entitled to keep trade secrets to themselves, but if you let them know that you are a potential investor and you would like to know more about their company, it is truly amazing what sort of information they will give you. Call around, and when you find someone with a bit of backbone, and that give off the impression of having their act together, then go with them. There is a high chance that they will succeed and you'll receive a great return on your investment.

How can you benefit from a venture capital firm as a small business? If you have a great idea and need some money to start off your new business model, then pitch it to a reliable venture capital firm. If they like it, they'll often times give you 100% of the start up funds you need to make it happen. Isn't that great? Now, consider that you will have to forfeit some of your profits to them, but it is a good option if your idea is really big, and you have no other choice.
About the Author
Terry Fitzroy is a professional writer specializing in venture capital financing and sell a business To learn more about Venture Capital visit Washington VC.com
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