When it comes to starting a small business, most business people consider venture capital as a source of funding. Here are 3 tips to make sure venture capital funds can be saved when submitting your business plan:
- Send your business plan to the right people
- Make sure your business has the potential to be very profitable
- Remember to include external strategies for your investor
Venture capitalists specialize in certain types of business. Some will specialize in industry, investing only in new energy companies, for example, while others are looking for a company of a certain size to invest in. It is worth researching to find out who the venture capital bakers are before you start your industry. Submit your business plan. Venture capitalists who are not specific to your industry can provide recommendations for other project investors to make your project more attractive. However, it would be a mistake to send it to your potential investors who will not even consider it.
Most venture capitalists look for a 5-10 times return on their initial investment. For example, after investing in a 2 2 million company, there should be a return of -20 14-20 million after about five years. To meet these needs, it is generally necessary to run a business that has a high rate of return on investment. If a lower return rate can be expected, such as for a clothing retailer, it may be best to look for an alternative fund, such as an investment or commercial bank.
Venture capitalists generally do not want to join a new venture indefinitely. Most will plan to drop the new project after five years, so you should give a clear explanation of how to achieve this. There can be various reasons for this. Some venture capital managers require that the holdings be sold from time to time to obtain other offers. However, by showing that you understand the limited time frame for many venture capitalists, you automatically make your project more attractive than those who do not.
In short, by sending your business plan to the right people, recognizing what rate of return is required for venture capitalist involvement, and incorporating external strategies, you can create a venture capital fund for a new and growing business. Improve your chances of getting it.