Learn More About Venture Capital
What is Venture Capital?
Venture capital (VC) is a type of financing. Small businesses seek VC for startups or potentially risky expansions. They usually don’t qualify for traditional financing such as bank loans. VC is classified as equity funding because the capitalist receives a share of the business and often a position on the Board of Directors.
How Do I Get Venture Capital Funding?
Contact a venture capitalist to start the process. You then:
Present your business, also known as the “pitch deck.”
Receive a “term sheet” that describes a possible offer.
Wait while the venture capitalist conducts due diligence on your business.
Receive a detailed offer.
Decide whether to accept the offer.
Venture capitalists work with companies that demonstrate superior growth potential and a high rate of return on their investment.
Is There More Than One Kind of VC?
The different types of venture capital include:
Seed money for research and development of a new project. It often provides funds to cover initial expenses.
Startup money when your product or service is in its final phases.
First-stage money that’s needed for increased infrastructure and distribution after your project has successfully launched.
Second-stage money that’s needed for expansion after your product or service is selling well.
Mezzanine money or bridge financing. It’s used to prepare your business for an IPO or sale.
The funding will have clauses that protect the venture capitalist’s investment if your business fails.
What Are The Advantages and Disadvantages of VC Financing?
The most significant advantage of venture capital is obtaining major funding when needed. You also receive the benefit of the expert’s expertise and networking.
The major disadvantage is the fact that you no longer have 100% ownership of your business. Obtaining the financing consumes valuable time and resources for an uncertain long-term benefit.
Masters Commercial Capital Group is the leader in business financing. Our team of specialists has the experience and resources to help you obtain capital that meets your business needs. Contact us today for personalized solutions that will keep your company growing.