NEWS

Venture Capital and Your Business

Business owners have one thing in common: They must constantly worry about the bottom line. Whether a startup, expansion, or entity that is decades old, money talks in business. Profitability is the only way to keep an entity afloat and gain additional investors when necessary, and there are many investors who specialize in business profitability. Venture capitalists are one such vehicle, and they can help you expand your business to its next level within your niche.

What is venture capital?

The financial website Investopedia defines venture capital as, “financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.” These investors are wealthy, and can also include banks and other financial institutions. A venture capital boost isn’t a loan, however. It is funding put into your business to help it grow in exchange for an investment in that business. The reality television show Shark Tank is an example of venture capital at work. The sharks fund a business idea in exchange for partial ownership and/or profits.

Angel investors are one form of venture capitalists. They work individually or as part of groups that give money to business startups or smaller businesses for their opening and expansion needs. Because this investment vehicle is risky – who knows if your business plan projections will come to fruition – many angel investors and venture capital companies look for high returns. Arguably, you cannot blame them. They are putting their money into your vision, and this move could fail miserably. This, however, is also the advantage to working with a venture capitalist, such as real estate investor Peter Foyo.

Invaluable Expertise

Foyo and other venture capitalists offer invaluable expertise to their investment recipients. They are experts in their fields, so they look for investment opportunities to match their strengths. They can sit down with you to discuss your future growth options. They have knowledge and ideas that you might have never thought of, and they will project your growth opportunities and help you pave the way toward them with a full-proof plan of attack. They don’t go into this blindly. They will lend their expertise to you in exchange for a portion of your profits or a stake in the company’s management.

This is how they make their money, which is why venture capital can be a hugely profitable holding. If you think their investments are limited to no-name companies, think again. Although initially a strong funding vehicle for the technology industry, venture capitalists also financed the expansion of companies such as Amazon, Starbucks, and Uber. In the technology niche, giants Apple, Google, Instagram, Microsoft, and Twitter all received venture capital and a growth plan that turned them into what they are today. Makes you want to get into VC financing yourself, doesn’t it?

Use Your Imagination

But that may very well be the key to get your venture capital financing. Think about how much money you would’ve earned if you had invested in Amazon’s growth, for example. Owner Jeff Bezos is the richest man in the world now, and he made many others who invested in his idea rich along the way. What would you be able to offer in return for a venture capital investment into your company? What would you earn if you invested in your own company? You should do that anyway, by the way, but the point is you must be able to envision your growth and profitability and, as a result, envision the profits your investors will make in order to pitch your ideas to them.

Can venture capital help your business? Yes, it can when used wisely. Venture capital investors finance startup and growth – although more growth – and they do so with the added benefit of their experience. This ensures their investment pays off for them, which means it also pays off for you.