Infographic: Venture Capital Explained

Infographic: Venture Capital Explained
September 28, 2016 Colette Cassidy

If you’re starting your own business, it’s quite likely that you’ll need sources of capital outside of your own finances in order to get the idea off the ground. Many first-time entrepreneurs who don’t have access to capital markets will seek funding from venture capitalists, who are wealthy investors that see huge potential in the fledgling business.
If this sounds like a workable option for you, then you can put together a proposal, submit it to the VC firm and await their feedback. If they’re interested, they’ll invite you for a further meeting and table an offer in exchange for a portion of your business. At this point the VC will have an active interest in the business and ensure that it is meeting pre-defined targets before releasing further capital. The VC will ultimately leave the business after a few years, most likely through a merger or acquisition.
Of course, a VC is not going to part with its money easily, so the entrepreneur has a number of boxes to tick before he/she even some close to securing investment. The VC will want to see solid indicators that the business has growth potential and that its targets are ambitious yet achievable. The entrepreneur’s personality is also crucial to any deal being struck. There needs to be visible signs of a rapport between the two parties and the entrepreneur should demonstrate a balance between being a firm decision-maker and being humble enough to take advice from others.
This infographic from All Finance Tax gives a broad overview of the venture capital process and dispenses some crucial advice for any entrepreneur thinking of approaching a VC. Have a read below.


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