Will VCs invest in your business?

Venture Capitalists

Will VCs invest in your business?

VCs are typically focused on high-growth industries and they are looking for a big return in a relatively short timeframe

Tuesday, October 14, 2008

CLEVELAND, USA: Securing venture capital will radically alter your business, as you exchange equity and company control for a crucial infusion of cash, greater growth potential and a bigger return on investment. How can you get an answer to the all-important question: Will VCs invest in your business? Read on...

Meeting VC expectations
Let's start with the bottom line big questions: Will venture capital accelerate the growth of your business? Can VCs achieve five to 10 times return on investment in about five years? And, will your VCs have multiple avenues for getting their money out of your business: acquisition, buyback or IPO?

"VCs are typically focused on high-growth industries and they are looking for a big return in a relatively short timeframe," said Tiffan Clark, Marketing Vice President of JumpStart Inc., the venture development organization behind IdeaCrossing, a free online resource that connects entrepreneurs with investors. "Also important to VCs is articulating clear strategic goals that investors, management, employees and customers can all understand and support."

Other factors VCs consider when evaluating potential investments:

* Are you poised to grow quickly through leadership and innovation after receiving capital?
* Do you answer a market need people will pay for?
* Do you have intellectual property on your product/idea?
* Are you generating revenue and do you have any notable customers?
* Do you have an experienced management team and can you attract top talent?
* Are you ready to lead or allow someone else to step in and lead your organization?

One of the surest ways to learn whether venture capitalists will back your business is to research and network online. Make the most of online business communities and peer networks such as IdeaCrossing, and ask other entrepreneurs, investors and business mentors for assistance and advice; many are generous with their time and expertise, and are happy to help.

©CIOL Bureau