What is venture capital?
What is venture capital?
A venture capitalist is an investor in start-ups, scale-ups and growing companies.
What is most important to understand with this type of investor is the type of capital being invested; Venture Capital. Venture capital, or venture capital, is capital that is provided to companies to finance the (rapid) growth, or start-up of the company. It is called venture capital because investing venture capital carries an increased risk. Often a venture capitalist investor is a company that consists of several people instead of one person (angel investor). These companies consist of professional investors (the General Partners) and their money comes from various, external, sources (the Limited Partners). How do Venture Capitalists work? Venture capital investors look for companies with high growth potential. The venture capitalist takes shares in the start-up, scale-up or fast-growing company and gains (partial) control over the future of the company and its operations. In return for their involvement, venture capitalists demand a high return on investment. A company with a turnover potential of EUR 10,000,000 is in almost all cases insufficient for a venture capital investor. As mentioned earlier, venture capital investments are often investments with a high risk profile. As a result, a substantial part of the investments made by the venture capital investor will not return. The aim of a venture capital investor is to make a return on the money invested. For this reason, venture capital investors sell their stake in the company after a period of time. For the above reasons, not every company or idea is suitable to be financed by a venture capitalist investor. As an entrepreneur you have to realize this and in this case you will have to turn to other types of financiers.
Difference Venture Capitalist and Angel Investor?
The difference between a venture capitalist and an angel investor lies in the following points.
– A venture capitalist is a company that largely invests other people’s money in a start-up, scale-up or growth company. Angel investors, on the other hand, invest their own private capital in the companies.
– Venuture capitalists generally invest more money in a company than an angel investor because they often have more capital at their disposal.
– Venutre capitalists consider growth potential the most important aspect of investing in a company. An angel investor is often about personal preference and the feeling of a company/entrepreneur.
– Angel investors often have valuable knowledge and advice for you, but in the end you as a company are in control of how much involvement you want from the angel investor. In contrast to venture capitalists, who often receive a place on the board in addition to capital, angel investors only have capital in the company concerned. They therefore have no formal role within the company, except that of investor/financier.
How do you find a Venture Capitalist?
Attracting a venture capital investor is often still a challenge. That is why we have 3 tips for you to make this search a little easier.
1. Know what you’re getting into As mentioned earlier, venture capitalists look for more than just placing capital, they often want a say in the management of the company. This is something that you as an entrepreneur should be open to.
2. Spend a lot of time on your business plan and pitch deck Venture capitalist investors are looking for companies with huge growth potential, so clearly show that your company has it!
3. Have a record in front of your head Venture capital investors often see more than 300 pitch decks per year. Often they will only make 1 – 3 investments per year, so they will not honor the vast majority of applications, so do not give up after you have received a number of negative (or often no) reactions.
4. Last but not least…
Sign up with platforms such as GetFunded.com, we have a large network of venture capitalists from which hopefully something beautiful can result! View the supply and demand on Getfunded.com.