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  Venture Capital - Three Steps to Success Introduction - Understanding the Process Professionally managed venture capital funds provide seed money to entrepreneurs. Typically, VC firms establish partnerships, in which to invest the money of their limited partners. Venture capitalists invest in companies for a short period of time for a substantial total return. Research is vital to targeting the right venture capitalists. Criteria for selecting the right venture capitalist include geographic, industry specialization, stage of development, size of investment preferences, investment role, and co-competitive ventures. Writing a Business Plan The first step is a striking, sound business plan. The business plan must immediately grab the venture capitalist's attention. A good plan is crucial, first as a management tool, and second as a means to obtain financing. While the plan is an essential element in securing financing, it should also be an operating guide to the business, with the goals, objectives, milestones and strategies clearly defined and well written. A good business plan will demonstrate the viability and growth potential of the business, while showcasing the entrepreneur's knowledge and understanding of what is needed to meet the company's objectives. The venture capitalist's first glance at the business plan is their initial opportunity to evaluate the individuals who will manage the business and to measure the potential for return on their investment. Prepare the Financials Realistic financial forecasts within the business plan are important to attract investors and retain their interest to participate in future rounds of financing. The financials must accurately reflect the various product development, marketing and manufacturing strategies described in each section of the plan. Continue to Step 1 of 3 > |
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