If you are an entrepreneur or you are planning on opening your start-up soon, you know how difficult it can be to raise funds and find investors for your idea. Nowadays there are plenty of options, from crowdfunding, family and friends loans, or pitching investors but there is one I have my hopes on and think from my experience is the best option when you need mentorship and investment: a Venture Capital Fund.
I´m sure that by now you have heard about Venture Capital Funds. If not, keep reading and discover how they work and what is the easiest way to get into some of them and obtain the investment you need to get your start-up to the next level.
Truth is that the best Venture Capital Funds are found in the U.S. but Latin America is catching up and has managed to fundraise more than 1,000 unicorn start-ups through Venture Capital Funds over the last few years.
Venture money plays an important role in the early stages of the innovation life cycle—the period in a company’s life when it begins to scaleits innovation. As estimated by Harvard Business Review, more than 80% of the money invested by venture capitalists goes into building the infrastructure required to grow the business.
One myth is that venture capitalists invest in good people and good ideas. The reality is that they invest in good industries. The critical challenge is to identify competent management that can supply a fast, growing demand.
If you want to obtain funds from Venture Capital there are some things you must know firsthand:
They focus investments using one specific criteria like:
Specific industry sectors like software, digital media, FinTech, etc.,
The stage your company is at: Meaningful revenues, early staged seeds, or Series A rounds.
Geography, highly populated cities with tech hubs.
You need to find Venture Capital that matches your company in these terms.
Other advice is fundraising basics like having a good pitch, proper introduction from a colleague or known investors might help. After getting through all these, your company will be evaluated in terms of experience, market size opportunity, revenue, partnership chances, business model efficiency, and its ability to adapt to new technologies and market changes.
All Venture Capitals have different organizational charts and compositions so you might as well have a look into the ones you select and see if the way they work fits your mindset and company values.
Venture capital financing can be crucial to the success of a startup. By understanding the key issues in venture financings, entrepreneurs can increase the likelihood of a successful outcome.