Raising Venture Capital Beacon NY

If you're wondering what venture capital firms are, it's high time you asked - especially if you have any intention of entering the business world with a level of force behind your initial push. Venture capital firms are, quite simply, those companies, which put their own budgets to work for smaller startup companies, and take a return on the investment. So, if a venture capital firm sees a good idea that its managers think will work, the venture capital firm invests money in that company and accepts a percentage of the profits based on how much capital they invested. Think of this as the startup version of stock sharing - only in this case, there is a single large stockholder - the venture capital firm.

Venture capital firms generally work on a private equity basis, which means everything is done very officially, on a contract basis, and generally requires a good working plan on the part of the businessman or businesswoman receiving the capital. If you're hoping to find investors and don't have a good plan to show them how you're going to take their money and turn it into something, you'd better start formulating one - because if you come to the table with only a few ideals and vague notions, you're never even going to get off the ground, let alone start producing a profit.

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Excellent question. There are, of course, resources available for startup companies other than venture capital firms. There are bank loans, for example, or standard capital loans from normal investors. The problem? Simple. Some company and business ideas are simply too "on the edge" for low-risk investors like banks and many investing houses to accept. The alternative, then, is raising venture capital. Venture capital firms are generally constituted somewhat differently than normal investing firms. Because venture capital endeavors are more risky than normal, venture capital firms often have to know more about the company actually using the money. This means that many venture capital firms address themselves specifically to certain markets - computers, say, or industrial equipment. The company's area is determined by the types of experts it hires - software venture capital firms, for example, will include technical experts as well as investors who have been high-level managers in software companies prior to joining the venture capital firm.

The downside to using venture capital firms is that they are more than simply giving you a loan. Venture capital firms are investing, which means that they have a say in what you can and can't do with whatever companies they happen to be invested in, as well as simply owning a portion of the equity. Then again, as we've said, many of the people in these venture capital firms are experts and nearly all are good with money - if you're willing to swallow your pride a bit, you might well get some very high quality advice and management help from your venture capital investors.

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Probably the two most visible and successful undertakings driven primarily by venture capital in recent memory have been the explosive growth of Silicon Valley and the dot com boom. It's often hard to remember these days that, in their first few formative years, computers were very risky developments. They really couldn't do much, they were huge, they were prohibitively expensive - no bank who valued its customers' money would invest in something like that. That job was left to those with more vision - the venture capital firms. As we've seen since then, the computing world blossomed into one of the most world-changing discoveries since fire, the wheel, and electricity.

The dot com revolution is another side effect of successful venture capital firms making their high risk investments. With the development of the Internet and its subsequent growth into one of the most - if not the most - powerful single economic forces on the planet, Internet based companies (such as eBay or Amazon, for instance) have taken off and grown to spectacular proportions. Google, for instance, is the current 400 pound gorilla in the world of tech industry, and one of the very few capable of facing off with the Microsoft giant. Regardless, Google and other Internet companies were initially funded by venture capitalists, and that's where the difference lies.

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