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Venture Funding

Here's a quick overview for entrepreneurs (and any one interested) that outlines venture funding and how startup capital is raised these days for startup companies and small businesses.

The terms "venture funding" and "startup company" have gone together like peanut butter and jelly for quite some time and especially more so in recent years. Still, the venture capital process seems to be mysterious to the majority of entrepreneurs that we speak with. Never fear! The Invstor.com Network can help shed some light on this elusive topic.

Venture funding--What's that?

So you're new to the whole process of raising capital for your business. Or maybe you just need to brush up on how venture capital funding works. We're here to help! Venture funding is a style of financing that startups and small businesses use to fund the growth of their companies. A venture capitalist (VC) provides funding, typically in excess of $1 million, in exchange for a stake of equity in the company that was funded. The VC hopes to see a handsome return on his/her investment within a short period of time (usually 3-5 years). Obviously, the sooner the return comes, the better. Unfortunately, many of these investments do not post impressive returns within this time period and the majority actually fails all together. In order to withstand such losses, every venture capital firm has strict criteria for investment. These firms also diversify their investments across several startups at any given time.

Where could I find an investor?

Think you're ready for the big time? So you have paying customers and you've put together a solid strategy for rapid expansion going forward. Now it's time to find somebody who is willing to pump in cash to turn this plan into reality. Where do you look? The Invstor.com Network is a great place to find a wide range of investors who may be interested in funding your deal. The site allows you to perform a quick search for investors based on a number of factors including geographic location and industry focus. You can find Angel investors, VCs, and even investment bankers. There are plenty of opportunities out there no matter what category and stage of funding your business falls under.

What next?

Once you have search Invstor.com and found an investor that looks like a good fit for your business, it's time to do a little homework. You'll want to find out the geographic and industry focus as well as the current businesses in the investor's portfolio. Would your company be a good fit? Don't waste time contacting an investor if you can't invision your company fitting into their existing portfolio. This caution is here as much for the sake of the investor as it is for you. As an entrepreneur you're interested in landing funding, but you also want an investor that has brain power and can help you grow your company with help from their industry contacts and expertise.

If you find a good fit, the next step is making contact. Whether you choose email, phone, or some creative method, be concise! Investors are already slammed with countless business plans each day. Don't contribute to the pile on their desk. Finally, try to make contact through a referral whenever possible. You'll already have the investor's attention if you've been recommended by a mutual friend.

Have a good story from a funding hunt? Email it over to us at Invstor.com.