Funding & Investors for a New Business
For many small business owners, funding & investors poses a constant and sometimes debilitating series of challenges. While the Internet has made it possible for virtually anyone to set up a business website and market it to the online market, the reality is that most entrepreneurs will not receive any sort of substantial funding from a third party without some sort of investment. Often, this comes in the form of a venture capital firm.
Venture capital firms are companies that assist with the structuring and raising of capital for growing businesses. Typically, they take a very small percentage of a company’s proceeds and invest them in a variety of different ventures. As a result, they often have a great deal of influence over how a given company is structured and operated. In many ways, they act as venture capitalists for the company.
As a result of being involved in such a critical aspect of a business, many new businesses simply do not have the resources to seek out significant funding & investors on their own. As such, they tend to work with an attorney or law firm that can serve as a sort of third party financing source. Many of these firms provide funding and investors assistance by acting as introducers and facilitating introductions between various individuals and various companies. The primary goal of such a partner is to obtain a large portion of the proceeds for his or her client. Therefore, it is very important that any potential third party partner be able to effectively screen individuals who may wish to provide funding to a new start up. This can ensure that those introductions that result in satisfactory investments are able to occur.
In addition, funding and investors usually require a great deal of disclosure. In many instances, it is extremely important that a small business is very open about the type of capital it is seeking or requires in order for investors to feel comfortable providing the type of investment. Additionally, it is imperative that potential investors and/or funding sources be made aware of all of the terms of the financing. This is to ensure that none of the parties become surprised at a later time and that everything is crystal clear at the time of closing.
As previously mentioned, most funding transactions will take place over the phone. Therefore, entrepreneurs should always be sure to have someone on the other end of the line who is able to offer a variety of useful suggestions and tips. By taking the time to properly advise and explain various options to funding participants, entrepreneurs will greatly increase their chances for success. Additionally, it can often be helpful to use several different lines of communication. This will help to ensure that there is continuity throughout the process and that people understand what their role in the whole process is.
The final consideration for successfully securing funding & investors for a new business is to make sure that all necessary paperwork is in place. In most instances, potential investors will require documentation regarding credit history, taxes, business history & future plans. It is essential that entrepreneurs are completely aware of what their obligations are regarding this aspect of their new endeavor prior to approaching any funding sources. By ensuring that all documentation is properly in place before seeking funding from any source, entrepreneurs stand a much better chance of getting their business a much needed investment at the onset.