VC...2 words that can help any entrepreneur to achive his objectives...but...how to contact this VC and who and what are this VC?
Let's start to introduce who are VC.
To explain better the concept of VC, wikipedia is the natural resource for a definition:
Venture capital : is a general term to describe financing for startup and early stage businesses as well as businesses in "turn around" situations. Venture capital investments generally are relatively high risk investments, but may offer the potential for above average returns. A venture capitalist (VC) is a person who makes such investments.
The roles performed by a venture capitalist are:
• directly providing funds for high risk, high return ventures
• arranging additional financing from other sources
• assessing and revising the proposed business model
• reformulating the overall strategy
• finding and hiring key managers
• finding supportive service companies and other business contacts
• firing existing managers where they think this is necessary
• buying-out existing partners (owners) where they think this is necessary
• providing operational and technical guidance to enhance overall business efficiency
• prepare the company for a potential exit (e.g. acquistion or initial public offering)
A great deal of specific expertise is usually involved, including negotiation and management and legal procedures required at different stages of a venture.
Now take a look at what type of Venture Capital there are and what operations they do.
A new venture may need several infusions of cash from venture capitalists as the business progresses.
• The first round, referred to as seed capital, is obtained prior to company launch. It is for marketing research, concept testing, and alpha and beta testing.
• The second round, referred to as start-up capital, is for hiring staff, renting office space, purchasing servers and other IT infrastructure, purchasing inventories, equipping the production system, and other activities involved in starting the business.
• As sales (and production) levels increase, additional rounds could be needed to modify the site, re-equip the production system, expand plant capacity, or purchase new facilities. These additional rounds are sometimes called second-stage financing or development capital.
• Mezzanine financing is the final round of financing before going public. Once a company's stock is publicly traded on a stock exchange, capital is raised by issuing and selling shares.
The terminology varies somewhat in different countries. In particular, in some countries where there is rarely or never any early financing, mezzanine finance is often referred to as venture capital.
Venture capitalists are very selective in deciding what to invest in. A common figure is that they invest only in about one in four hundred ventures presented to them.
They are only interested in ventures with high growth potential. Only ventures with high growth potential are capable of providing the return that venture capitalists expect, and structure their businesses to expect. Because many businesses cannot create the growth required to have an exit event within the required timeframe, venture capital is not suitable for everyone.
Venture capitalists usually expect to be able to assign personnel to key management positions and also to obtain one or more seats on the company's board of directors.
