The Use of Venture Capital Funding for Business Expansion

Venture capitals are the source of funding for your business who invests in your business with an expecting return from their investment. Venture capitalists invest in your business as they are not only looking for interest but also some profit in return of their investment. In order to attract venture capital towards your business you need to show some growth, grounding and solid repute of your business.

Sources of capital investment include investment funds, large investment companies investing in small businesses and partnerships. There are a number of venture capital firms that are in the backend associated with investment banks and insurance companies. Some of the venture capitals are also associated with large financial companies and other kinds of financial institutions.

In order to expand your business you can have investment funds from venture capitalists however their criteria to invest in business are rather strict. Most of these investors are interested in convertible stocks and look for almost 50 percent partnership in business. They are also interested in preferred stock of the company and also ask for some other rights such as right to elect the members of board of directors and to receive regular financial reports of the business. Sometimes they also insist in giving technical and managerial advice to the business as a part of board of directors.

In order to acquire capital funding from these investors try to make a solid and attractive business plan. Make sure your product and services look innovative to them. Make sure your management team is qualified and experienced to gain the confidence of these investors.

Other Related Accounting Articles:

• Definition and Explanation of Capital Budgeting
• Capital Investment Appraisal Technique
• Ranking Investment Projects – The Preference Decisions
• Typical Capital Budgeting Decisions
• Internal Rate of Return (IRR) Method in Capital Budgeting Decisions
• Time Value of Money
• Capital Budgeting Decisions With Uncertain Cash Flows
• Postaudit of Investment Projects
• Capital Expenditure
• Payback Period Method for Capital Budgeting Decisions