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What venture capitalists are looking for

happyman19220291.jpgIt is always challenging for business owners, of any size to find financing, for their business. There are a number of ways to seek out financing, however, many business owners turn to venture capitalists. While it is definitely not easy to find financing, from venture capitalists, they are always looking for businesses, in which to invest their money. Businesses of every size and type, apply to venture capitalists, for financing. They will then structure an agreement that they will return the investors' money plus some agreed upon percentage. It is important to keep in mind that while applying to venture capitalists for money may be easy; convincing them to invest in the company can be much more difficult. However, there are certain things that venture capitalists are looking for, in their investments; if your business can provide these you stand a much better chance of securing venture capitalist funding.

  • Effective production-This is one of the first things that venture capitalists will want to look for. They will closely to at the past and potential future production, of the business. They will want to make sure that the business is producing products in the most effective manner and rate. Investors will also want to see, whether or not the business has turned a successful profit each year. If you are a business with a solid plan, for future growth and development will help put investors at ease regarding the potential of a company.
  • Strong market potential-Venture capitalists will look at is the long-term market potential, for the business' products or services. This is important since the investors will not want to invest in a business, that produces a product or service that will be obsolete in five years. If there is a chance that the product or service could become obsolete, then investors will want to know what your plans are to modify it. The bottom line is that businesses that have planned, for future changes in market trends, will do the best in securing money from venture capitalists.
  • Experienced management team-Venture capitalists understand that they are not really investing in ideas, but in the people who manage the idea. Because of this it is crucial to show that your business is being lead in a competent manner. They also want to know that the management has the skills that will ensure that the business will be successful and grow. Having managers, who have experience and quality management skills, is critical to securing venture capital funding. A solid management structure will impress venture capitalists looking to invest.Keep in mind that lower management is not the only part of management they will look at. They will look all through your company, from the president, all the way down to the shipping manager to ensure that everyone is carrying their weight and have implemented policies with which the investors agree.

Well-thought out plans for the money-Venture capitalists will be specifically interested in how your business, plans to use the extra money. Businesses must have a quality investment plan that outlines their plans,for turning a profit with the money given them by the investors. The plan must take into consideration the following factors including but not limited to:
1. Current and future economic conditions
2. Market trends
3. Company policy
4. Any aspect of the business that can show investors that their money will grow in the company. It is important to understand that these plans are especially important during the initial requests,for funding. This is because they will grab the venture capitalists attention up front and cast a quality shadow on the company.

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