You did it.
Your idea has made it through inception, research & development, and now you have something to sell. It is time to raise capital and you are confident someone will come along and see the potential, the necessity, and fund you indefinitely. In the mean time you need to find a Venture Capitalist. The following provides information on Equity Financing.
Get in the mind-set.
This is about money and a Venture Capitalist has a lot of experience with it. A Venture Capitalist is in the industry of Equity Financing. They are in this business because they do not want make the product that you made nor do they want to do the daily grind with it. Instead, they buy and sell capital. They provide to start-ups an alternative to debt financing due to limited owner capital or insufficient collateral. You, the owner, needs capital to start selling your product or service. You are asking a Venture Capitalist to purchase a part of your company. They in turn are asking you to “purchase” their money by selling them a part of your company. This is an interesting concept because it reminds you that essentially ownership of your idea, product, or service is now being shared between you and another.
If you are able to find your Angel investor and when you ask money from a Venture Capitalist you are being relieved of having to enter into “debt financing”. It is important to remember this is a business venture and the Venture Capitalist will consider you on how they can make money by providing capital and retaining interest in your company. This is not to say that your vision is not important. It is to see that an investor’s reason for doing business with you is a different point of view on the same subject.
An investment by a Venture Capitalist is usually long term. A decision to become invested in your business may commit to range between five to eight years, normally not much longer. It is generally takes this amount of time to see your business mature and see the interest of the investment begins to have value. The goal is to arrive at a time in the business when the “return on investment” is high and the option to “cash out” for the investor is available.
It begins with what an investor looks at when they are being presented with a product or service.