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Venture Capital to Start a Business

Venture capital is the high-risk investment needed to start a business, and venture capitalists, such as angel investors, are investors who are willing to take these risks in order to receive high returns.

The Wall Street Journal points out a flaw in relying on “angel investors” by noting that only 2% of startup companies who applied to the largest angel-capital group attracted enough attention to even be considered.

In reality 90% of entrepreneurs raised their venture capital on their own through personal savings, business partners, family, friends, bank loans, or other means.

If you are unable to raise your venture capital through these means, then you need to get investors. The best way to do this is with a solid business plan. Take the television show Shark Tank, for example. The “sharks” ask the person seeking the investment tough questions such as:

–          How much did you sell this past year?
–          What is your profit margin?
–          Where do you see the business going?

If the business owners cannot answer these questions, they will not get an investment. The same is true in the business world. If you can’t answer these questions, then it will be very difficult to find somebody who is willing to invest in your company or idea.

The most professional way to answer such questions is through corporate documents such as a business plan or company bylaws, which should be drafted by a Business Law Attorney. This gives investors confidence in the professionalism and ability of the business to succeed, which will help them achieve their goal of receiving a return on their investment.

Source: The Wall Street Journal

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