Venture capital Funds

You want to start a new Venture or start-up, but you do not have enough money, and need fund or financing… venture capital firms can provide you with the money, known as venture capital fund:

sure you can rely on your friends or your family or relatives, and for sure this is a double-edged weapon with the most positive thing, that they have the trust, that helps you to get their financing without any efforts, compared to those who do not know you or do not know them.

but this does not last long and cannot be entirely relied upon…

On the other hand and according to (nibusinessinfo.co.uk):

  • Take a negative direction and the relationship goes to be destroyed, or any misunderstanding may have occurred about anything related to the agreements.
  • in any time, they will require their money to be back
  • they maybe want to be more involved in the business, and for sure this is not good for you…

and because of the money is a very very important factor in success any venture or start-up, so you need to make sure you can get a resource that can rely on it for a long time,

by Venture capital firms, you can get supported and financed for your venture or start-up.

So What is Venture capital fund:

Simply, venture capital fund is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.

Venture capital fund, it is not only in a form of Money, is may be technical or even managerial support (from marketing, business, finance supporting).

 

venture capital fund - SME Consulting

the photo from Freepik

 

But If you need to get their support, you must Go through some stages.

Venture capital fund stages:

1-Seed Capital or Seed fund:

  • Simply this stage, made for the new ideas or Ventures that exists on paper, and in this stage, you have an opportunity to convince Venture capital firms with your idea, in order to get their financing in exchange of a part of the equity of his/her company.
  • Seed capital stage considered as initial funding for your operations until you produce your tangible product, or release your service and start making Revenues.
  • The most and important goal:

(according to venture capital firms) is investigating if the idea of the startup is good and there is any potential of profitability of the venture or not, and if the results are positive, that is mean they will finance the idea, to be researched and developed, make your market research or even get expand in your team

And if the results are negative. That is mean the owner of the idea must work on it and improve his idea.

  • The total amount of money is not large it is small because this is initial funding for a project on paper (it’s a highly risky one, the project is still in the formulation stage).
  • The investors who fund the seed capital, do so to have a stake in the company and once the company starts reaping the rewards it becomes the growing enterprise. Once it reaches a growth stage, several investors are likely to provide funds to finance the further operations of the business.

2-startup capital:

  • It’s nearly like the previous stage but it is more advanced.
  • After you convinced Venture Capital firms and get your financing, is known as venture capital fund, to do your development and research,

now you have what it looks like a prototype to provide or present it to investors,

and provide your business plan, but not yet sold any piece of your product or lunch your serves.

  • Now you are working on your marketing, advertising or promotion for your product,
  • or even expand more and more in your team members

(your team member from the previous stage, but if you want to get more team, it is available and also the VC firm monitor your process,

by hiring one of their team to be in the startup’s team [want to be financed]

(person from the venture capital firm be one of the startup’s management team).

  • You only make everything that required to produce a product, (your final product here [you made in this stage] will be an initial step in the next stage.

3-early stage or second stage:

  • After the first and second stages, and after a prototype is ready and approved with your business plan/marketing research and other management functions,

the funds in this stage are will go toward manufacturing, production, sales, and more marketing activities.

  • And for sure the amount of fund is higher than the previous 2 stages,

this stage is to get involved more and more in”

  1. production,
  2. in death management activities
  3. , and also get more involved in the market.
  •  as we mentioned above:

the venture capital firm hires one of them to follow or monitor the process and transactions that occurred,

  • If he finds that, the start-up is not doing well, they will finish the financing process or reduce it.
  • and if there is a Promising future (potential success), they will decide to continue and go to the next stage,

4-Expansion stage:

  • this is a stage of growth and advanced one that,

you can achieve Only with effort and hard work

  • in this stage, the fund will be higher than the previous stages

(we are talking about if you succeed in the previous stage) .

  • this stage can pushes you forward especially if your startup achieving very profitability and want to achieve more and more because in this stage you can get fund to make your products spread in another places, cities, and countries. [in this stage, venture capital firms let you expand in your production and your product wherever you want, (produce more products in same cities or expand abroad, and make death marketing, production activities, and any activity that helps you in promoting your product much more and expand in the whole world].

Did you believe that this stage needs and deserves a great effort to reach it?

5- Bridge/pre-IPO stage:

  • This is the important stage in all previous stages, this is a completely new world.
  • After all the previous stages, the startup {which become a big company} may be looking to go public,

according to “my Accounting course” and “Wikipedia”:

IPO is the initial sale of a company’s shares to institutional investors,

who sell them to the public through a securities exchange.

given that its products and services have found suitable traction. and you can use these fund for activities such as:

  1. Mergers and acquisitions
  2. Price reductions/other measures to drive out competitors
  3. Financing the steps toward an initial public offering.

One main reason for going public is that the investors can exit out of the company,

after earning and covering profits for the risks they have taken all the years.

 

 

 

 According to small business trends, the reasons for small business failure are:
1- 42% is for, there is no need for your product or the idea provided,
so you need a very accurate, depth market research and analysis, to find out needs, wants, demand of your product and target your customer.
14 % for Poor marketing,
so you need a good marketing plan
2- 29% is for Ran out of cash.
so you need to make your financial plan. and  for sure also you need a feasibility study

3-17% is for Product without a business model, so you need a business plan.

and the most important of all that, any venture capital fund will ask you about your business plan.a financial plan, etc…

to get their financing.

so we can provide you with all management consultation, just check the links above and know more about our prices.

 

 

 



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