AngelInvestorsForum.com

Brian W. Walker




Venture Capital. It comes in many shapes, forms, opportunities…but shares a common characteristic: a risk is taken. In my line of work, I run against many “fire-in-the-belly” entrepreneurs who genuinely have a fantastic idea or business plan. Unfortunately, they lack the capital necessary to turn their business plan and/or ideas into a reality.

Every month, at least 100 projects cross my desk where the borrower is looking for a joint venture partner or venture capital. Unfortunately, only one or two of these will get funded. One of the reasons is the market itself: banks are not lending, the secondary market is non-existent….so all that is left is money from private equity…especially if you are looking for 100% financing.

Let’s talk about the transactions that actually DO GET FUNDED…these are projects that have a high degree of predictability. A power plant with a contract to purchase it’s product for 25 years, for example. A casino in the Bahamas that has a 180% internal rate of return…in short, these are all projects that are predictably profitable and will give the investors (joint venture partners or venture capitalists) a HUGE return on their investments. Other great projects are projects where there is proprietary or patented information or technology.

While a 20% IRR (internal rate of return) is respectable, it just isn’t attractive to venture capitalists who can make 7 times that amount on another project in a shorter amount of time. In short, if you are speaking with venture capitalists, they are concerned about one thing: how much money they can make by investing in your project. Keep that in mind and you’ll be able to speak to them in their own vernacular.

Thomas C Su




When comes to capital raising, Internet is actually your best resource, not only you can find enormous amount of information, private equity firm and venture capital fund profiles – you can also use press releases and articles to your advantage.

When comes to capital raising and deal assessments – the fist starting point for venture capital funds is always go to Internet, they will look at your website and do a detailed web search on your company and the industry.

A good web marketing strategy will result in large amount of articles published or information about your company, and this is a great point to demonstrate to venture capital providers that you have a good marketing strategy in place already.

If the venture capital providers are unable to find any information on your company, they are likely to skip your company due to insufficient information available on Internet – that they unable to find information to carry out even basic due diligence.

Therefore, do not under-estimate the importance of web marketing and importance of press releases.

Things you can do to impress Venture Capital Funds

o Client Profile – This is the best way to impress venture capital firms – it demonstrates you have existing clients, it shows you have client testimonials. If you have clients in diversified industries, include that and shows venture capital funds that you have diversified clients.

o Multilingual Website – This demonstrates you have international perspective, most of venture capital funds I have met are pretty global oriented people, they are not interested in just a company with a domestic market share. Popular languages are Chinese and Spanish – the 2 fastest growing communities in the world.
o Lots of Press Releases – Make regular press releases, best, if you can have them in different languages. If the venture capital fund can find press releases about your company independently, they will always be impressed.

o Plain Language – Big common mistake is use technical jargons, that always bore people to tears, imagine that venture capital funds review 5 to 10 business opportunities a day, you have less than 30 minutes to impress them, skip the jargons and save for later discussions.

o Know your competitors – No. 1 question asked by venture capital funds is always who your competitors are, and how are they going? If you are in an industry that all of your competitors are doing poorly, why should you be different? Highlight how your business is different from your competitors. Show them press release or company profiles about your competitors, these can always be obtained from Internet, show them you have carried out market intelligence.

o Blogs – Use blogs, company blogs, this can be for your own press releases or simply ideas and company development – venture capital firms have been finding this quite useful, and this can also help you in terms of web marketing.

There are also other web marketing techniques you should explore to attract venture capital investors – join various private equity and venture capital groups and forums such as Facebook and LinkedIn as well as groups for your industry.

This is a very useful technique and by doing so, many companies have established useful business networks and connections with others – we have done this for many years and we have established thousands of business contacts.

The best way would be to ultimately creating a group for your industry on your own – that will continue to attract more like minded people to your group.

Thomas C Su




Do not be frustrated if you have failed to raise capital from venture capital funds. Only a very small percentage of companies do raise capital from venture capital funds – and in the current environment, this percentage is even less.

Main Reasons rejected by venture capital funds

o The deal is too small – many venture capital funds have mandates – minimum investment would be $1 million or $10m, if you are just seeking for a small capital, they will not talk to you.

o New Company – start-ups should go for alternatives rather than venture capital funds, there are specific start-up funding providers or investors or apply for grants.

o Lack of existing revenue – Look, let us be realistic about it – would you invest in a business that has no revenue established or a business that has 3 years of revenue. If you have made profit, even a small profit, show venture capital companies that. Some have said that it is 10 times harder for a business to raise capital without revenue.

o Too Technical – You have the best idea but unable to express them in plain English (or other languages) to venture capital firms. Remember what Warren Buffet’s golden rule – “Never invest in things you do not understand”

o Relying on Corporate Advisors and Brokers – If you do nothing and rely on corporate advisors or brokers, it will be impossible to raise capital. You have to work with them closely, you have to improve your business, write press releases, advisors or brokers can not do them for you.

o Demonstrate that “I do not need the money” – ironically, venture capital funds always like to invest in businesses that are already sustainable or already on track – the businesses that actually do not capital to survive but the capital to grow or expand. If you can demonstrate that, venture capital funds will come and knock on your door.

When I set up my business for the very first time, I could fund the business myself from my own investments – I then grew my business from $0 revenue to a profitable business in 12 months, and had good growth for next 2 years. I went to venture capital funds in the first 12 months for the working capital and was turned back immediately.
2nd year into my business, I was approached by other venture capital funds to see how I was going, and 3rd year into business, I was approached by the same venture capital funds who were interested in my business – this was much easier as I was then after expansion capital instead of working capital.

So, rule no.1 is always build up your business first, make it worthwhile then talk to venture capital funds – not raise the capital first and build the business.

Unless your ideas or applications are really state-of-art, and there is no shortage of great concepts that have raised money from venture capital such as MySpace, Twitters or eve Facebook – but all of them have demonstrated there is a solid business- such as number of members, members growth rate – these are also regarded as company assets.

Remember, Hotmail was sold to Microsoft – because it has millions of registered users – and smart companies can use them for marketing purpose. So, when comes to asset of the company, sometimes it is not just the financial aspects, but what your company can really bring and that is your special point.

Some of the good examples are – maybe your particular website has a specific target group of visitors, I have a website with around 20,000 members but they are all Chinese speaking investors for instance, there are also some Hispanic news websites which have very niche target audiences.

Maybe it is a product or service you are offering, a good friend of mine has established a mobile car maintenance franchise, a small business initially but a great idea, another business I have reviewed uses air to wash cars, again, a tiny business, but a very interesting idea which can draw attention from investors even without the first revenue.

Sofia Bikidou




Venture capital funds are pooled investments which are used to provide businesses with a source of financing. These investment pools or venture capital pools are from outside investors. The person that makes investments is called a venture capitalist. Since this investment is a high risk type of investment groups of venture capitalists form a firm wherein they will place all of their venture capital pools which is to be invested in various types of businesses that the firm carefully selects.

Engaging in a venture capital investment business requires for a great amount of money and for this reason most firms chooses to affiliate with big financial institutions like banks, insurance companies and others. Most pools have a fixed life of ten years; this is made so in order to lessen the exposure to management and marketing risk of venture capital firms. Ten years is the safest length of time in which they can be sure that to recover their investment.

Since venture capital investment is a high risk type of investment most firms would demand a seat on a company’s board of directors. This way they will be able to carefully monitor all business endeavours as well as every business transaction that a company is engaging at. There are also some firms that would go as far as taking over the management of a business especially when they feel that the present handler is not capable enough of running the business.

If you are an entrepreneur and is considering venture capital fund as your option for capital financing make sure that you ready yourself for some surprises. And as much as possible before signing any contract with a firm make sure that you understand everything there is to know about venture capital investment.

Venture capital funds makes excellent source of additional capital however in order to be successful in venture capital-raising you need first to prove to the venture capitalist that your business is worth their time and their investment. There are key issues that you need to carefully look into if you want to be given venture capital financing:

Numerical knowledge is an essential tool especially if you are to deal with venture capitalist. This pertains to your business cash flow requirements, current and projected gross profit together with your business net profit levels. It is very important that you know every detail about your business especially its finances. Don’t forget to build a viable business plan. And include there the advantages as well as the potential markets that are open for your business. Likewise, it would be at your advantage also if you can document your achievements, goals for success as well as your potential for growth. You also have to clearly identify your markets. Venture capitalists appreciate a secure and feasible business plan. Understand that venture capital investment is a high risk investment and therefore it is just fair for a venture capitalist to share in the ownership of the business. It would be best for you to be flexible and to negotiate for better deals. It would also be best if you would take pre-emptive legal causes for your protection. Aside from that the pre-emptive mechanism will give you the power to maintain control over your company. Try to present your business plan in the most professional way possible. It is very important that you impress the venture capital firm. It is always best to exceed the investor’s expectations of you and your business.

And lastly always remember that investors don’t have a great amount of knowledge regarding your products, your business and most of all regarding you. They are taking a huge amount of risks in investing in your business that is why they need to know whether you believe in your business because if you do so will they.

Bill Pratt




Venture capitalism would be one of the things, which keeps businesses booming everywhere. It is basically one of the ways, which helps the newer businesses to thrive and flourish, because venture capitalists are always looking for fresh and innovative ventures, which could potentially yield a large return in the long run. They are not really into those businesses, which are already flourishing as they have more interest on the ones, which are just starting out or in need of restructuring.

Venture capital essentially refers to the funds that a venture capitalist provides to a venture or business in exchange for a company’s stake. Instead of simply loaning the money, these venture capitalists invest on the business in the hopes that it would be yielding a lot of money eventually. This would mean that whatever future profits and earnings of the company, he or she would have a share in it. This would go the same with any losses.

Venture capitalism is truly a risky business however it has become the source of support of the industry as a lot of start-up companies depend on these forms of investments to be able to keep their business operational and also to make sure that their ideas would materialize. Generally, those people that have great ideas and the knowledge to be able to execute them look for venture capitalists to get funding for their capital. Since they are not yet major players in the industry, these individuals usually do not have access to the traditional resources of capital like banks, private lending institutions and other financial institutions.

Low Jeremy




It’s a risky business, but still, somebody decided to do it. Venture capital is a sort of financing scheme that funds businesses that have been found to have some growth potential.

Venture capital is also called risk capital. For businesses that have very limited start-up capital, they could go find a venture capital investor. But for the venture capitalist, they still need to weigh the various risks involve.

A venture capital is an investment that is basically provided by third-party investors. This investment is usually used for enterprises that were deemed to be too risky that even the standard market investors or banks avoid putting a single cent on them.

Although this kind of investment would be very advantageous for entrepreneurs that cannot find funding through regular means, some people still avoid venture capital due to the fact that venture capital investors usually have the power to intervene and run the company itself aside from being part owners of the company.

For the venture capitalist, Arkansas might just be the place to look for businesses to invest in. Cities like Charlotte and Fox offers more than what you think. Venture capitalists’ expected high rate of return might be present in such small, sleepy towns. Likewise, for a small business in Charlotte having some venture capitalists will give them a couple of benefits like funding, management assistance and lower costs over the short term.

The local government has been grooming Charlotte to become a great city. Some even dubbed the city as the next Atlanta. The government has been building infrastructures, setting up a better environment for businesses or entrepreneurs. And just like the state of Arkansas, Charlotte is as diverse.

People of all ages and socio economic backgrounds converge in a city where they decided to call home. The city has some huge potential locked away. It’s just up to people like risk taking, business minded individuals and venture capitalist to unearth this huge potential, harness it, and develop it into a full blow and lucrative investment opportunity.

But venture capital also needs some push from local business and entrepreneurs. Venture capitalists tend to act more aggressively if sound proposals are being presented to them.

It is therefore important that people in Charlotte start believing in their capabilities and potential and begin reaching out to the wealthy investors across the country. They need to come out and declare that people in Charlotte are ready to play with the big boys of business investments.