The Basics :There are also companies designed and set up for the purpose of sourcing for and investing in startup businesses and already small successful businesses that may be looking to expand their operation, but lack the financial backing needed. The venture capitalist play a very important role in extending such financial help to those looking for financial backing but don’t have the proper credential to approach establishments such as banks, government loan institutions or finance houses.
Besides being noted for their financial capabilities, the venture capitalists can also provide other skills such as managerial and technical expertise. These too may provide invaluable assistance to those lacking in this area but still possess a winning formula for making phenomenal money.
Most venture capitalist financing sources come from a pool of wealthy investors, investments banks and other financial institutions that pool their mainly monetary resources to form investments arms that popularly extend financial assistance to promising business ventures. However because of the nature the extension, there is also what may seem like a disadvantage tagged to such assistance and this would come in the form of the said investors wanting to play an active in the business entity. For most business ventures seeking financial assistance, this form of “interference” would present an ideal situation or solution.
Thus, in addition to actually having some equity in the company, the venture capitalist expects to be involved in some level or another to ensure the investments are going in the direction intended.
Synopsis
It is quite normal, in fact very necessary to ask questions before investing into anything, especially when it involves a considerable amount of capital. Venture capital investments, usually entail a substantial amount being lent towards a business endeavor, without the backing of any tangible assets, therefore the questioning exercise is only to be expected.
What To Ask ..
The following are some of the questions that should be asked before venturing into the capital investment game:
• Perhaps the foremost question to be asked is about the actual business and what it is all about. Facts should be established as to what the business intends to accomplish and within what time frame. As for the individual seeking the funds, there should be a sales pitch that coves all these issues and presented in a confident and powerful manner to grab the attention of the potential capital investor.
• Questioning the level of competitive presence and how the business entity is prepared to tackle this issue should also be done. Ensuring the business owner is aware of the competition and the tactics used by the competitors is something that needs to be explored. This is to ensure there are no unpleasant surprises sometime into the investment program. It would also give the capital investor an idea of just how wholesome the business strategy is for the company that is seeking the funds.
• Through the consideration process, the capital investor should also ensure the business entity intended for the investment is already prepared with a supporting and strong customer base. This is an essential aspect to question, as it will give the investor a projected view of the profits expected.