Venture capital investment is a great tool to push your business forward. It provides you with much needed funding and mentorship; an asset for the young entrepreneur.
However it can also cause you to lose control of your company. If your company is not making any profits under your current leadership, venture capitalists will step in and scale up your business.
This usually won't happen immediately as venture capitalists expect to see returns within three to five years.
As their money is tied to your venture, it will be difficult to prevent them from asserting creative control and making final decisions.
However, venture capital investment is a fit for companies who want to grow their business or have a buyout exit strategy.
In a nutshell, venture capital investment can help you with;
1. Mentoring: This is an invaluable asset in any young company. Venture capital investors are veterans of the industry they work in and will be able to provide key and strategic advice to grow your business.
2. Exit strategy: These investors are able to help prepare your company for IPO, acquisition or a trade sale.
3. Partners: Venture capitalists have a pool of peers in similar fields who can be potential investors or strategic partners. Basically, they provide you with a strong network to help improve your overall business.
Venture capitalists are interested in companies that are post start-up and involved with IT and biotechnology.
Therefore, if you are looking at venture capitalists as an option, it is important to decide if they are indeed the best choice for you.