Alternative options to raise capital for venture capital growth

Venture Capital is a specific term that refers to the financing from a venture capitalist. These are professional investors and serial may be individuals or part of a company. Often, venture capitalists have a niche based on the type or size business and and or growth stage. They are likely to see a lot of proposals in front of them (sometimes hundreds per month), be interested in a few, and invest in even less. Approximately 1-3% of all offers to make a venture capitalist are funded. So, with a lower number, you must be clearly impressive.

The growth is usually associated with the access and retention of money by optimizing profitable business. People often see venture capital as a magic wand to solve everything, but it is not. Owners must have a huge desire to grow and the desire to give a little 'ownership or control. For many, not wanting to lose control will make them a poor fit for venture capital. (If you work at this early stage could save you a lot of headaches).

Remember, it is only a matter of money. From a business point of view, there is money and money intelligently. Smart Money has contacts means that expertise, advice and often, and new sales opportunities. This helps the owner, and investors to grow the business.

Venture Capital is only one way to finance a business and in fact is one of the least common but most often discussed. You may or may not be the right option for you (a discussion with a consultant could help you decide which way is the right one for you).

Here are some options to consider.

Your Own Money - many businesses are financed by personal savings of the owner, or from money earned from equity in the property. This is often easier to access money. Often an investor would like to see some of the background of the owner in the company ("skin in the game") would like to consider before investing.

Private Equity - Private Equity and Venture Capital are almost the same thing, but with a slightly different flavor. Venture Capital tends to be the term used for a society of early stage and private equity funding for the next stage for further growth. We are specialists in every area and you will find several companies with their own criteria.

FF and F - family, friends and Fools. Those closest to the business and often unsophisticated investors. This kind of money can come with a more emotional baggage and interference (as opposed to help) from its suppliers, but may be the fastest way to access small amounts of capital. Often investors will be more than the amount needed.

Angel Investors - business angels ranging from major venture capitalists in their motivation and level of involvement. Often angels are more involved in the business, providing advice and mentoring on the basis of current experience in a particular area. For this reason, matching angels and owners is a critical factor. There are substantial networks of angels easily identifiable. Pitching for them is no less demanding than a venture capitalist as still reviewing hundreds of proposals and to accept only a handful. Often the needs around exit strategies are different for an angel investment, and are satisfied with a slightly longer period (say 5-7 years compared to 3-4 for a venture capitalist).

Bootstrapping - organic growth through reinvestment of profits. No external capital injected.

The banks - banks lend money, but are more concerned about the resources of your business. Expect to personally guarantee anything.

Leasing - This can be a way to finance the purchase of details that allow for expansion. They will normally be leases of property and secured by those assets. Often you can hire specialist equipment that a bank will not lend themselves to.

Merger / acquisition strategy - it may seek to acquire or be acquired. Generally merging also has a strong and a weaker partner. By combining the resources of two or more companies may be a path of growth - and when it is done with a company in the same industry can do a lot of sense - at least on paper. Many mergers are affected by cultural differences and resentments that can kill the unexpected benefits.

Inventory Financing - specialized lending institutions lend money against inventory you have. This may be more expensive than a bank, but could allow access to the funds you could not otherwise have.

Accounts Receivable Financing / Factoring - once again a specialist area of ​​lending that can help you tap into a source of funds that do not know you had.

IPO - this is a strategy usually after some initial capital raising and have proven to be a viable business is by developing a track record. In Australia there are various ways to "list". They are useful for lifting large amounts of money (50 million dollars and up) because the costs can be very high (more than $ 1 million).

MBO (Management Buy Out) - This strategy tends to be a next step, rather than a funding strategy to boot. In essence, the debt rose to buy the owners and investors. It is often a strategy to regain control by outside investors, or when investors seek to divest the business.

One of the most important things to remember in all of these strategies is that they all require a considerable amount of work in order to make them work - the way it has structured the company in dealings with employees, suppliers and customers - must be examined and treated, in order to make the company attractive as an investment proposal. This process of governing and derisking can take anywhere from three months to one year. It is often expensive, both in actual costs (consultants, legal advice, accounting advice), as well as changing the focus of the owners of "sticking to the knitting" and make money in the business for a focus on how the company presents itself. ......