Matias Campiani is an expert in this field and many other business types. Venture capital sounds like such a fancy term, something that is out of the reach of most people, but it isn’t as hard to understand as you may fear. It relates to investment in new businesses. The new businesses are often looking for financing and as they are just starting out banks will not lend them very much if anything at all. The benefit is therefore working both ways, hopefully. The company will be relieved for any capital that they can raise and their gratitude is shown with a strong percentage of profit return. At the end of the day the company would not be able to trade or make any profit if it didn’t have your investment, so it can be a very lucrative deal.
It is obviously high risk, the business and their owner are just starting out. The market may be unknown but if you believe in a product or a person strongly enough then it might be worth a try. It also depends on what is called your attitude to investment risk; these types of investment obviously come with high level of risk. This means you have to be prepared to lose everything, but you are taking the risk of winning big.
The companies will often give the financial advisors some say in decisions as they can often have more financial experience than the businessmen who are just starting out. Again, this can have a positive impact on the performance of the company and thus the level of returns you will get.
There are two types of venture capital one is a straight one of investment into the venture by a venture capitalist or there is a pooled fund for a group of investors and this is called a Venture Capital Fund.
In order for a business to get investments through venture capital you will need to have an idea or product that piques people’s interest. You will need to have a full business plan and strategy to show them including costings and potential profits. The investors will want a time frame on this success and they will also need to believe in you and think that you have the full package for what it takes to succeed. A lot of them will be successful businessmen themselves and they will spot if there are things you haven’t thought of or if you don’t seem the right person for the job.
Companies looking for capital quite often think that an idea is enough. It isn’t, it is a great start but there is a lot more that needs to be done. You need to show how you will get other people to notice your product. They will want you to have had documented discussions with legal professionals as well as financial ones. You should practice your pitch and hope to come across as a knowledgeable, approachable and level-headed person.