Gain access to Millions of dollars in Venture Capital.
For fledgling companies, or those in need of an injection of
capital for expansion or improvement in profitability, a very
attractive way of raising money is through Venture Capital.
This method is particularly attractive to the company which
has gone public but has not been around along enough to
gain full Stock Exchange listing. Companies in this situation
can still sell shares to the public, but by the company being
unlisted, marketing these shares is relatively difficult.
Investors are generally less willing to invest in companies
without a stock market listing because they know that,
should they wish to dispose of their stock, finding a suitable
buyer will be much less easy than for a listed company.
Because the Government, particularly in recent years, is
committed to encouraging business enterprise there has
been a rapid and welcome increase in the number of
institutions able to supply venture capital to new and
expanding businesses.
It is generally accepted in the business world that the initial
and ongoing profitabliity of new companies is greatly
enhanced by early investment of working capital. This
realization has led to a flourishing venture capital market.
There are many venture capital agencies operating in Britain
today. Their job is to attract investment from corporate and
indervidual investors and allocate the money to new and
expanding businesses. These venture capital agencies charge
a high rate of commission for supplying venture capital, but
only if the business which they are financing is successful. If
the business should fail, they attempt to recoup whatever
cash they can to return to the investors.
Often, if a firm which they have invested in fails completely
they will simply write off the investment. Investors know that
this kind of venture capital is relatively high risk. They are
prepared to take this risk because of the potentially much
higher returns than can normally be achieved by simply
buying shares in already established business.
Raising venture capital is a particularly suitable method of
financing a new or expanding business which is not ready for
stock market flotation. The investors own a percentage of the
company directly proportional to the amount of their
investment. It is not uncommon for a company to make a
successful start with the aid of venture capital and later, when
established and operating as a public limited company, for
the managing owners to buy out the sleeping partners who
have supplied a large part of the initial investment to get
things up and running.
Most banks now have a venture capital subsiduary and a
large number of specialist venture capital funds are also
available. To be eleigible for a large investment of this type of
funding you need to have a sound business idea and a
realistic and properly presented business plan. It is not within
the scope of this guide to show you how to construct a
business plan. There are many excellent books on this
subject and by looking through titles in the business and
commercial section of a good public library and good
bookshops, you will find all the information you need
concerning the creation of a professional business plan.
When you have a good business idea for a new venture or a
realistic set of proposals to make a failing company
profitable you should construct a business plan and cash
flow forecast. Take this to venture capital lenders, either
through your bank or from a private source, and providing
your ideas are realistic and your business plan is thorough
and professionally presented, you can have access to
hundreds of thousands or even to millions of dollars in
capital.
An alternative method of attracting venture capital is to
advertise directly for investors in your new or expanding
business. Simply place classified advertising in the
appropriate section of quality newspapers and specialist
financial publications. Ads such as, for example, "Funding
required for Business Exapnsion" or " capital Required for
Exciting and Profitable New Venture", will attract the interest of
those who have money to invest.
When you receive a response to your advertising, arrange to
meet with th interested parties and give them a presentation
of your business proposals. Always act in a professional
manner and appear confident and knowledgeable at all times.
Sell yourself and your idea in the correct fashion and the
necessary capital will be forthcoming.
You might be surprised how many previously inexperienced
entepreneurs have started in this way. Simply by showing the
right kind of get up and go ideas to the right kind of people,
it is amazing how much money you could attract. There is
billions of dollars of money circulating around in our
economy every day. If you present yourself as a professional
businessman or woman, there is no reason why you should
not get yourself a share of it.
The venture capital is, naturally though, only the beginning.
Once you have aquired the funding you need, you must
ensure that the capiatl is put to work in the most efficient
,manner possible. You must do everything in your powwer to
make a success of the business which you have gone to all
the trouble of obtaining funds for. A great many potentially
successful businesses fail because they are underfunded in
their early stages, ensure that your new enterprise is properly
financed and your chances of success are immensely
increased.
Managing to attract significant investment should not leave
you feeling complacent about the day to day running of the
business though. Throwing money into any business, good or
bad, will always make things easier. However, just because
you have managed to persuade investors that yours is a
worthy cause should not distract you from your prime
objective, that of making the company as profitable as
possible. The investors are not giving the money away. They
are taking a calculated risk in investing in your business
because they hope to achieve a profit in exchange for putting
up their cash. So, you should never attempt to raise venture
capital for any enterprise that you are not confident can be
made into a success.
