If you’re an entrepreneur looking to start a business, financing it will be one of your biggest challenges. Getting a loan from a bank is one option, but that only works if your loan is anything less than a million dollars. If you need more money for your next business idea, raising venture capital funds is the best way to do it.
If you don’t know what venture capital is, just think Shark Tank. It’s well-off investors or banks that finance startups and small businesses they believe have immense growth potential. In return, they expect equity or input into company decisions.
Start by figuring out two things- how much your company is worth and how much you need to raise. Many things factor into your company’s value, like its age, growth rate, management experience, revenue, and intellectual property. To determine how much you need to raise, you need to figure out things like how much money you can use right now and how far along your business is. It’s important to not ask for more than you need because investors will expect more in return- either a more significant share of profits or more control over company decisions.
You don’t have to go on Shark Tank to get venture capital. A referral from a bank or other financial professional will tell you where you need to go, and then you need to practice your pitch. Find a friendly audience (that should include at least one finance professional) to practice your pitch and give you feedback. It would be best if you were prepared to answer questions and defend your pitch as well. After all, if you were a venture capitalist, wouldn’t you want to know everything about what you’re investing in?
With these helpful tips and some work, you are ready to raise venture capital funds for your next big idea.