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Have you seen the headlines lately on the pyramid schemes where investors are swindled out of millions of dollars? These investment firms pay out profits to older investors from current ones and when investors run out, so do the profits. It is easy to attract individual investors to invest in your small business as long as you give out that return on investment. However, Venture Capital for your small business is a whole different ballgame. A unique product or service is one criterion for attracting venture capitalists but that would apply only to your first try at entrepreneurship. As we all know even if you're first, that doesn't spell success. If other companies new and old realize that there are customers out there waiting to buy your product or service, they will jump into the fray as your competition. Venture Capitalists know this and weigh that among other things if they decide to invest in your small company. They are looking for a large return on their investment so they will try to get as much of your company as they can in the form of control and return on investment.

If you are new to the Venture Capital game they will clean you out and leave you high and dry. That is why you must have experienced representation in the form of an experienced board of directors and legal representation. Seed money or startup investment may come from friends, family, your house equity and people you know who trust your judgment and are willing to help you out at the beginning. When Venture Capitalists step in to become part of your little venture you're well on your way to growth and hopefully prosperity. However, everyone knows that four out of five startups fail.
A thorough business plan is an essential part of your success because it is a guide for all to see the potential that your small company will have for growth and return on investment. These are some of the essential components that capital venture companies look at. Apart from the company leadership and their experience with the product or service, the board of directors and their experience with similar products or services and maybe even your employees and the growth of the company even if it's product or service have not made any money. The potential for exponential income revenue must be present.
On the other hand if you have been there before with a previous startup and have successfully either sold or gone public, then you are well on your way to getting venture capital with greater ease this time around. If you hook up with someone who has done the whole startup process and has sold or gone public with their startup company that will open doors to the venture capitalists money chain. Investors who have bought successful companies and are investing in your new company are also considered by venture capitalists as assets to your company.
Venture Capital is not an easy proposition and in order to get that money you must walk that tight rope and not fall off. You must be willing to give up the house and live in the garage for a short period of time until you can sell that garage and move into your own house again.

Learn more about this author, Israel Torres.
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